What is Working Capital Adjustment?
Definition
A post-close true-up that adjusts purchase price based on the target's actual working capital at closing versus a pre-agreed target. Sellers often run AR collection hard and let AP grow in the months before close to game this number.
Frequently asked questions
What is Working Capital Adjustment?
A post-close true-up that adjusts purchase price based on the target's actual working capital at closing versus a pre-agreed target. Sellers often run AR collection hard and let AP grow in the months before close to game this number.
Why does working capital adjustment matter in a contract?
Risk level: High. A $200K miss can erase searcher equity contribution. Inkvex flags working capital adjustment clauses during analysis, explains the risk in plain English, and suggests negotiation language to protect your interests.
How does Inkvex analyze working capital adjustment clauses?
Inkvex scans your contract for working capital adjustment-related clauses, flags risks in plain English, quotes the exact language from your document, and cites jurisdiction-specific laws that may affect enforceability. Upload any contract at inkvex.app for a free analysis.
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