$100m DCF valuation, but company has $25m of customer deposits as a liability on the balance sheet. How would you treat the customer deposits for purposes of the valuation or in the purchase agreement / purchase price adjustment, if at all? Customer deposits are essentially payment advances upfront, used to cover ongoing expenses, etc. and offset against customer revenue / AR when earned in future periods.
Different thoughts on treatment? At $25m of a $100m valuation, obviously the treatment could have a material impact on the purchase price.
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