Negotiating Working Capital: Maximizing M&A Valuation
In most M&A transactions, the parties arrive at a purchase price by multiplying the target company’s revenue or earnings before interest, taxes, depreciation, and amortization (EBITDA) by an agreed-upon multiple. While this is generally true, a buyer will also typically require a minimum amount of “working capital” on the balance sheet when the deal closes to ensure there are no immediate liquidity issues. A buyer doesn’t want to pay twice: Once to buy the business and then to have to inject capital post-closing in order to keep the business running.
The working capital issue is highly complex and can be one of the most contentious issues in M&A negotiations.
During the webinar Ben explores:
- How working-capital hurdles provide protection and benefits to both parties in a transaction
- How working-capital hurdles are calculated
- How purchase price adjustments are made based on agreed-upon working capital hurdles
WEBINAR PRESENTER:
