Working Capital Adjustment: Common Issues in M&A Transactions

M&A Deal Tips #6: M&A Attorney Scott Bleier explains why working capital is a vital piece of the M&A transaction. What is working capital? In its simplest definition, working capital is current assets over current liabilities. Buyers want to buy a business with enough working capital to keep this going without an immediate need for a cash infusion. Sellers, conversely, don't want to sell the business with too much working capital or cash - as they want to realize as much profit as possible. So how do you negotiate a target working capital amount for 2 or 3 months? And what happens when disputes arise over the working capital post-closing? Drafting and negotiating a proper working capital adjustment is an important component of the M&A deal, and one Morse, Barnes-Brown & Pendleton attorneys have the experience to provide their clients.
View Scott Bleier's attorney bio here:
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For more resources on M&A transactions, please see:
Mergers & Acquisitions Practice
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See also:
Top Ten Issues in M&A Transactions
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