Working Capital Adjustment
How working-capital adjustment allocates risk, which wording controls, and what to verify in the signed agreement.
- Which accounts, exclusions, accounting principles, and target apply?
- Who prepares the estimate and closing statement on what timeline?
- What access, objection, expert, and payment procedures resolve differences?
If this clause already feels aggressive in isolation, upload the full contract and see how it combines with payment terms, liabilities, and exit rights.
Analyze My ContractWhat this clause actually does
A working-capital adjustment compares specified closing working capital with a negotiated target and adjusts the purchase price under the contract's formula. The definition, included accounts, accounting principles, consistency standard, estimated closing statement, post-close true-up, access rights, and dispute process drive the result. Differences in receivables, payables, inventory, accruals, or seasonality can be legitimate or contentious; do not assume manipulation without transaction evidence.
Why people get burned by this clause
Working-capital adjustment can change economics, timing, control, or remedies. Its effect turns on the signed wording, related sections, transaction facts, and applicable law; a market label or isolated sentence does not settle the result.
What should make you slow down
- The document does not clearly answer: Which accounts, exclusions, accounting principles, and target apply?
- The document does not clearly answer: Who prepares the estimate and closing statement on what timeline?
- The document does not clearly answer: What access, objection, expert, and payment procedures resolve differences?
Where you usually see it
- Asset purchase agreements
- Stock purchase agreements
What the platform checks in the live contract
- Which accounts, exclusions, accounting principles, and target apply?
- Who prepares the estimate and closing statement on what timeline?
- What access, objection, expert, and payment procedures resolve differences?
What to test against your deal
- Confirm in the document: Which accounts, exclusions, accounting principles, and target apply?
- Confirm in the document: Who prepares the estimate and closing statement on what timeline?
- Confirm in the document: What access, objection, expert, and payment procedures resolve differences?
Definitions worth opening next
Clause pages that share the risk pattern
Articles that go deeper
Common questions about this clause
The signed wording, definitions, exceptions, related provisions, governing law, and the transaction facts. Review the clause in that full context rather than relying on a general benchmark.
Which accounts, exclusions, accounting principles, and target apply? Who prepares the estimate and closing statement on what timeline? What access, objection, expert, and payment procedures resolve differences?
Treat working-capital adjustment as a document-specific allocation of risk. Identify the trigger, scope, exceptions, procedure, and consequence, then verify consequential legal conclusions for the governing jurisdiction.
See how this clause behaves in the real contract.
The clause library gives you a starting point. Document analysis can surface relevant language, show related sections, and organize risk signals and follow-up questions for review against the source file.