Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
How the Working Capital Peg Traps M&A Sellers After Close
In episode 71 of The Acquisition Talk, Lucas and Luna dissect the working capital peg — a seemingly technical M&A contract clause that routinely costs sellers hundreds of thousands of dollars after the deal closes. Using the cautionary tale of a $45 million industrial distribution business, they explain how buyers peg the target net working capital to a trailing average, then pocket the post-close cash burn as a purchase price adjustment. Lucas walks through the math: a 12-day DWC swing turned a $2.1 million working capital target into a $1.2 million clawback. They compare this trap to the…
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