Avoiding Pitfalls Of Working Capital True-Ups

While optimism about M&A activity is increasing, deals remain highly sensitive to pricing. Because working capital true-ups may result in a significant purchase price adjustment, private equity executives, whether they are the buyer or seller, need to be more aware of working capital during the transaction process. Failure to do so may result in unpleasant surprises, and in this market where there are numerous impediments to closing deals, conducting proper due diligence on working capital is a proactive way to help move the deal forward and mitigate unfavorable outcomes.