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Net Working Capital – and how to keep more of it

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


Document Document Type
Net Working Capital PowerPoint Deck PDF Download
Example of NWC spreadsheets from an actual deal MS Excel Download
Example of a NWC language in LOI and Purchase Agreement PDF Download

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