The working capital adjustment requires that the buyer and seller exchange working capital estimates and calculations. In financial models everything is automatic, but in the real world a structured process must be in place. In this article we will explore this sequence.
How you work towards a normalized level of working capital will vary from one transaction to the next, but the variables that most frequently make this calculation challenging are the company’s rate of growth and exposure to seasonality. To understand why we can explore a business with highly seasonal revenue.
To better understand how the working capital adjustment works in a control private equity transaction, we first need to distinguish between the accounting definition of working capital and the definition of working capital for the purposes of a transaction.
In this video we are going to learn how to use the =INDIRECT function to create flexible inputs for dynamic Excel Table formulas.
I have had a surprising number of people admit that they disproportionately hold cash because investments make them uncomfortable. Ironically, whether or not you choose to invest doesn’t matter. If you have wealth, you are invested. And cash can be comforting, for reasons outlined below. But there are reasons it shouldn’t be, for reasons (also) outlined below.