In past transactions I have found that it is standard practice to include a Net Working Capital Peg in the LOI and PSA to cover off the transfer of net working capital to a buyer. Recently we have had a lawyer push back on this being standard practice. I would be curious if others have found this to be standard practice or out of the norm? Also if anyone has seen a survey or white paper that talks to NWC construct in lower middle market transactions I would love to read it!
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I spent a decade in middle market transactions and this is common practice.
in my opinion, all deals should include some level of networking capital as it is the gasoline to the car (business).
Without working capital you will likely need a line of credit with your banking institution