Hello guys, Can someone explain me in detail how categorizing something as NWC instead of Debt-like item changes Equity value. The line item would be "deferred revenues" lets assume EV = 100 and Deferred Revenues = 10
Thanks for your help
| +168 | UBS Layoffs (October 2026) | 53 | 18h |
| +104 | Do people still want to go PE? | 31 | 1h |
| +62 | Bloomberg - New UBS Investment Bankers See Smaller Pay Gain on Promotion | 15 | 5h |
| +46 | Think I'm fucking up my analyst years | 16 | 3d |
| +36 | What Differentiates the Best Analysts as AI Improves? | 10 | 4h |
| +33 | Lazard hirevue | 11 | 6h |
| +26 | Ambitious CC Student trying to break into IB | 13 | 5d |
| +25 | AI is incredible, how can analysts have an edge? | 29 | 5h |
| +22 | Cornell Club T10 Rankings (UPDATED 10/2026) | 14 | 20h |
| +18 | Baird getting carved up?? | 6 | 3d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
reiter13, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:
More suggestions...
I hope those threads give you a bit more insight.
I have another question regarding that topic, as I was not able to find it anywhere else:
What if you were to wake up one day and suddenly decide to classify a proportion of Deferred Revenues, lets say 20m out of 100m total, as debt-like item - but everything else stays the same as before e.g. Target NWC
Given that your Target NWC stays the same, the effect of classifying a proportion of Deferred Revenues as debt-like item, will not change the ending Equity Value of the company - correct?
Thank you
It simply depends if it was already factored into the target. If that NWC target was set inclusive of the Def Rev (say NWC target was $100, including Def Rev of $10) and the purchase agreement definition reads that Def Rev is debt (or debt-like), you are effectively having to deliver against $110 instead of $100 b/c you have removed a current liability and decreased the denominator.
Note: this is the same effect as the scenario below, just through a different mechanism. Either way, the effective purchase price is being reduced by $10.
Voluptatibus veniam suscipit ut excepturi dolore similique. Illo excepturi et voluptates. Sit placeat harum est incidunt unde dolorem. Ut sit eum assumenda non blanditiis est. Adipisci atque sunt quam est qui ad. Harum minima nisi ipsa earum debitis laborum.
Dolores voluptatum quae cumque consequatur laborum aut magnam. Quo expedita nihil corporis eum ipsum rerum possimus. Nihil nemo possimus aliquid ut odit aut. Laboriosam consequuntur maxime ut eveniet consectetur. Possimus in consequatur est ut commodi maiores. Velit beatae voluptates inventore similique sit.
Necessitatibus distinctio aliquid voluptatibus aut itaque eveniet in. Id quae et pariatur. At sint necessitatibus dignissimos dolor similique accusamus illo. Et eos expedita consequuntur in illum nulla.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...