Advice on executing a work-in-progress true-up?

September 18, 2025

by a searcher in Boston, MA, USA

Hi all - I'm (fingers crossed) near closing on a deal which will require a work in progress true-up. For context: this is an asset sale, I'm purchasing without working capital (bringing my own / baked into my loan), jobs take 12+ weeks to finish, 50% deposit is taken up front and the remainder after completion, and 100+ jobs will be in progress at close. Our LOI states we will conduct a true up within 3 days of closing. We've already negotiated the methodology for allocating revenue from jobs based on % completion by breaking down jobs into milestones and assigning a mutually agreeable weight to each. For example, if tasks 1-3 on a job were complete pre-close, this translates to 40% completion and thus the sellers get 40% of the jobs revenue. Any advice on how to execute this in practice? Tactically, what is the easiest way to distribute funds from these jobs? Thanks!

Reply by a searcher
from University of Pennsylvania in Charlotte, NC, USA

Thanks for the tag, ^redacted‌. Ian, when you say "purchasing without working capital" does that mean sellers retain closing a/r and inventory as well as a/p and other normal course working capital liabilities? Are the upfront deposits accounted for as a current liability? Do sellers keep 100% of closing cash without offset for a deposit liability? If you can share what the agreed-upon terms are, then folks can better help address the question about the mechanics. We have done a few of these.

Reply by a professional
from University of Michigan in Detroit, MI, USA

Hi ^redacted‌, I echo ^redacted‌'s comments. Even if this is an asset purchase, the deposits have to come with you--it's not the seller's money after all. As for splitting the receivables (per your agreed methodology), this is normally done as the receivables come in, not in advance. You and the seller should agree to some regular reconciliation. For example, once a week, you will review the WIP against receivables and remit anything owed (and vice versa--if this is an asset sale, some of those receivables may end up wit seller when they belong to you). Happy to discuss further. Reach out at redacted

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