Net Working Capital Adjustment, Net Working Capital Target, Transaction Terms

The Working Capital Adjustment, Part III

The Working Capital Adjustment, Part III This week we wrap our net working capital (NWC) series with a discussion of a common pitfall that sellers should guard against when negotiating a working capital adjustment. A deferred revenue liability, if improperly considered in NWC adjustment negotiations, can be used to dip into a seller’s pocket post-closing. In Parts I and II of the series, we defined net working capital and identified the fundamental reason that it is important (Part I). We also introduced the philosophical rationale for including…
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Net Working Capital Adjustment, Net Working Capital Target, Transaction Terms

The Working Capital Adjustment, Part II

The Working Capital Adjustment, Part II This week we pick back up Part II of our net working capital discussion with a question: is it possible for a seller to drain his company of cash just before transaction close? If so, when and how can he do it? Last week I began this Agility Growth series with an analysis of the net working capital adjustment. In Part I of the discussion, we defined net working capital and identified the fundamental reason that it is important in a…
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