Understanding Working Capital in M&A Transactions: A Primer

In most M&A transactions, the parties arrive at a purchase price by multiplying the target company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) by an agreed upon multiple. While this is generally true, it’s only part of the story. The working capital issue is highly complex and can be one of the most contentious issues in M&A negotiations.

We designed this primer to provide an introduction to the concept of working capital, and how it plays into M&A transactions. The content was taken from the webinar, "Negotiating Working Capital: Maximizing M&A Valuations" in collaboration with Ben Boissevain of Ascento Capital, LLC. 


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primer PDF