Show notes
What is working capital and why is it so heavily negotiated in M&A transactions? Justin Thomas from Cohen & Company joined us for a deep dive into working capital to discuss how it is calculated and how it impacts the sale of businesses.1:03 - Working capital definition2:57 - How does working capital affect purchase price?6:12 - How does the market most commonly calculate working capital requirements?7:40 - Is working capital affected by a business's seasonality?9:19 - Example working capital calculation illustrating when it would positively or negatively impact purchase price12:23 - What is a working capital collar?13:46 - What items are most commonly miscategorized as working capital?15:18 - What is the goal of a working capital adjustment?17:18 - What is the most common reason for working capital adjustments?18:56 - How is deferred revenue viewed from a working capital perspective?
