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what does initial capital mean? Is that the total down payment for a business?

I have a potential buyer asking me why I have say $20,000 as the "initial fee" and $2,500 as the "initial capital". I thought "initial capital" was the cash they'd need to invest once they'd purchased the business. Are "initial fee" and "initial capital" the same thing?

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Answers (3)
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We are financial consultants to a group of investors whom we have their consent to manage their funds which is in our custody for cooperation in joint venture business investments.

Our areas of interest include Property Development and real estate, Health Care, Education and training, Mining and exploration, Energy, oil and gas,Technology, Software development, Agriculture, Manufacturing, Finance Services and Leisure.However, all viable proposals within reason will be considered.

Funds shall be made available to you as a direct investment loan at 3% interest rate per annual for a period of 2 or 30 years depending on what you prefer. You may contact us if you have interesting investment proposal for possible business collaboration for our study.

We look forward to your reply to enable us provide you with details or you may visit our website.

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Thank you.

Yours Sincerely
Jesse Peterson
phone: (980) 239-7539

Aug 9, 2017
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Signal Hill Holdings, LLC
General Partner

It sounds to me as though you are selling a business(an ongoing business?) and used those terms to refer to the down payment and working capital requirement respectively. However, "Initial Fee" sounds more like a lawyer's retainer than a down payment. "Initial Capital" might be reasonably accurate but sounds more like a startup investment than any term used in a business sale.

Nov 9, 2014
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The BAF Group LLC

"Initial fee" is a meaningless term. "Initial capital" can be interpreted a number of ways, because so many people use vague terms - frequently incorrectly. But initial capital usually means all of the cash you have to invest in the business. Normally, it includes any deposit, subsequent deposits to use for acquiring a loan, and any cash reserves to be utilized once you initiate operations, before you achieve a break even point. Remember that, even if you are buying a mature business, you may not walk into a cash-positive position. If the business provides goods or services and bills the Clients for later payment, you could have a sizable negative cash flow until those bills are actually paid.

Tell the Buyer to explain him/herself.

Nov 4, 2014

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