Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
The Working Capital Target Trap That Shrinks M&A Payouts
In Episode 92 of The Acquisition Talk, Lucas and Luna unpack one of the most overlooked landmines in M&A purchase agreements: the working capital target clause. Using the real-world case of a mid-market industrial distributor that lost $1.2 million at closing because of a poorly defined net working capital peg, they explain how buyers define 'normalized working capital,' how trailing-twelve-month averages can shaft sellers, and why the definition of cash and debt matters more than the purchase price itself. They walk through a typical deal math example, highlight the difference…
The skinny
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