Net Working Capital adjustments

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February 26, 2024

by a searcher from Bowling Green State University in Surrey, BC, Canada

I see a lot of posts asking about Net Working Capital adjustments. Here's an article from a US-based Advisory services shop that I think does a great job in explaining the concept, why it's important, and things to think about in NWC analysis. Enjoy!
https://www.stout.com/en/insights/article/net-working-capital-what-to-know-when-involved-in-acquisition

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commentor profile
Reply by a searcher
from University of Texas at Austin in Houston, TX, USA
Also, ^redacted‌ hosted an AMA on this today. If you shoot him an email, he may be able to share the recording and sample worksheet.
https://www.searchfunder.com/event/view/1447
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Reply by a professional
from University of Alberta in Calgary, AB, Canada
This is very helpful Geoff! Depending on the size of the acquisition, it's also good for Buyers & Sellers to understand that the NWC adjustment on "smaller" deals is simplified to often only adjust for: Accounts Receivable, Accounts Payable and Inventory (on a cash free/debt free deal).
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