Understanding Working Capital in M&A Transactions: A Primer

In most M&A transactions, the parties arrive at a purchase price by multiplying the target company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) by an agreed-upon multiple. While this is generally true, it’s only part of the story. The working capital issue is highly complex and can be one of the most contentious issues in M&A negotiations.

We designed this primer to provide an introduction to the concept of working capital, and how it plays into M&A transactions. The content was taken from the webinar, "Negotiating Working Capital: Maximizing M&A Valuations" in collaboration with Ben Boissevain of Ascento Capital, LLC.  

primer pdf