Hello all;
Quick question: when negotiating a target working capital amount on a deal, what are the pros and cons of setting absolute dollar amounts and days of inventories, payables and sales outstanding? Can anyone please shed some light?
Thank you,
Gabriel
| +190 | Why UBS Is the Worst Place to Start Your IB Career | 32 | 4h |
| +159 | ONLY THESE BANKS OR YOU STRUCK OUT | 39 | 11h |
| +117 | IB Energy Drink Tier List / Ranking | 77 | 4h |
| +65 | Firm Thinks I'm Lying About Offer | 20 | 10h |
| +54 | Indiana University Fraternity Pipelines | 35 | 2h |
| +42 | Rogo AI | 19 | 2h |
| +39 | Stay at Weak Dealflow Team or Lateral? | 12 | 1d |
| +37 | Elite Boutique interview questions | 9 | 3h |
| +34 | Suspended for a Year | 13 | 3h |
| +22 | 1st Half 2026 (1H26) RX IB & RX Co. Rankings | 14 | 2d |
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.
If the target working capital agreed is based on days etc., the main cons is the need for further DD and more time needed to negotiate.
You will need to negotiate with the sellers on what the appropriate days should be (as both obviously will be arguing for opposite direction), and even when the days is agreed, the actual working capital will need to again be calculated from the latest accounts on the date of signing, this means more DD will need to be done to make sure the latest accounts is alright.
I think most transactions use lockbox nowadays.
Natus aspernatur amet ut ea vel. Libero id impedit sunt in minus. Consequatur iusto laborum voluptas itaque voluptatem repudiandae architecto velit. Reprehenderit exercitationem doloremque laudantium quod quibusdam repellat.
Sapiente et in qui exercitationem. Ullam omnis commodi earum qui. Unde aut maxime sed incidunt quis neque. Corrupti eos dignissimos accusantium repellendus itaque. Voluptas repellat ratione rerum rerum nihil.
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...