How much of your first 90 days post-close gets eaten by reporting / WC true-up?

Based on the most helpful WSO content, the first 90 days post-close can indeed involve significant time spent on reporting setup and working capital (WC) true-up. Here's a breakdown:

1. Working Capital True-Up:

   • The seller typically provides a preliminary schedule of unaudited net working capital balances a few days before closing.
   • The buyer validates these balances and can dispute them if there are material disagreements. This process can take a few months post-close, depending on the complexity and any disputes.
   • If discrepancies arise, they are resolved as prescribed in the SPA (Sale and Purchase Agreement), and any differences are repaid to the buyer or seller accordingly. This process can be time-consuming but is critical to ensure accurate financial adjustments.

2. Portco Reporting Setup:

   • Setting up reporting for the portfolio company (portco) is another significant task. This involves aligning the company's financial reporting with the new owner's requirements, which can include new templates, KPIs, and compliance standards.
   • While associates may assist with data gathering and initial setup, much of the heavy lifting is typically handled by management and external advisors. Associates might focus on supporting tasks rather than leading the process.

3. Time and Pain Points:

   • The process can be tedious and detail-oriented, especially if there are inefficiencies in the portco's existing systems or if disputes arise during the WC true-up.
   • However, the level of involvement and "pain" depends on the deal's complexity, the quality of the portco's existing financial systems, and the clarity of the SPA terms.

In real life, while associates may not lead these efforts, they often play a supporting role, particularly in data analysis and ensuring compliance with the new reporting standards. Management and advisors typically handle the more strategic and contentious aspects of the process.

Sources: https://www.wallstreetoasis.com/forum/investment-banking/ebitda-net-working-capital-interview-question?customgpt=1, Q&A: Finished Busy Season in B4 Audit, Working Capital considerations in LBO, How common are 100 hour weeks in HF?, Q&A: HF Analyst