Net Working Capital

And How to Keep More of it in a Transaction

In theory all assets necessary to produce the revenue and earnings of your company needs to be passed to the buyer at close – and that includes an “operating level” of net working capital.  It is, in my opinion, extremely important to know how this works before entering into a transaction.  And if you realize how it works a year or two before a transaction, you can often tighten up your operations and walk away with significant more cash out of the deal.

This module starts with a basic explanation of Net Working Capital then it uses a real-world example of NWC from an actual deal.  We follow the NWC concept from the NWC language in a real letter-of-intent, to the NWC calculation spreadsheets, how we negotiated the NWC target value, and into the actual NWC language that ended up in the final purchase agreement.

The module ends with a look at typical issues that arise and how to maximize the net proceeds from a business sale by working with the NWC concept.l Materials