"Negotiated working capital target for a deal" - what does this mean please?

newkid2019's picture
Rank: Baboon | 105

Hi everyone:

I'm just browsing some current PE associates experiences and saw some of them mention that they "negotiated working capital target" for a deal that they worked on. Pardon my ignorance, but could someone enlighten me on what does mean and how does it actually work please? How do you go about setting a quantitative target (do you compare to similar firms, or use some type of financial metrics), and usually, what are the levers one can pull in negotiating this?