Working Capital Adjustment

Working Capital Adjustment is a purchase price adjustment mechanism in an M&A deal that reconciles actual closing working capital to a negotiated target level, increasing or decreasing the final purchase price accordingly. In deal economics, a Working Capital Adjustment is used to ensure the business is delivered with a normalized level of short-term assets and liabilities, and Working Capital Adjustment disputes often center on accounting policies, seasonality, and classification.

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Ryan Roberts Startup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.