Working Capital Assistance

Avoid nasty surprises at the end of the deal.

In an acquisition, the seller is expected to deliver a certain level of working capital to the buyer. Seller and buyer must negotiate a working capital target and definitions to be included in the purchase agreement.

Too often, seller and buyer wait until the end of the acquisition process to reach common ground on working capital. And since the working capital true-up can mean a significant adjustment to the final purchase price, the only way to avoid a nasty surprise at the end is to spend more time on working capital at the front-end.

Instead, sellers typically spend their time identifying a suitable buyer, and buyers conduct due diligence and arrange transaction financing. But by leaving the working capital true-up to the end, major issues can arise. The closing can be delayed, and post-closing disputes are all too common.

Working capital assistance paves the way to a successful closing
To avoid unpleasant surprises and stressful disagreements, your team should include experienced RSM transaction advisory professionals to advise you on working capital matters, including: analysis of working capital trends; assistance with setting target working capital; and ensuring purchase agreement language and definitions are clear. We can also assist with the post-closing review of working capital and help resolve any disputes that may arise.

Our team can help you:

  • Analyze net working capital during the due diligence phase
  • Establish working capital targets
  • Review the draft purchase agreement with your attorney prior to closing
  • Calculate closing net working capital
  • Review net working capital as initially prepared by the counterparty
  • Work through the mediation or arbitration process

While we can help you at any stage prior to or after closing, it's best to address the working capital negotiation sooner rather than later.

Optimize the working capital deal component and avoid nasty surprises. Call RSM.

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Michael Grossman
National Practice Leader