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Axial Radar: Don’t Let NWC Kill Your Deal

Axial Radar

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Happy Friday and welcome to another edition of Axial Radar!

Buyers and sellers rely on a range of financial tools to establish fair market value for a deal. Just a few weeks ago, we discussed the intricacies of EBITDA adjustments and how abusing them could kill deals. This week, we’re covering another M&A provision that has probably claimed the lives of just as many (if not more) deals. You guessed it, we’re talking net working capital (NWC) adjustments.

NWC is a mechanism to determine the financial viability of a business. Assets less liabilities will tell you whether or not the business has the working capital available to fund its short-term commitments. If only the formula were that simple… This week’s featured Industry Trends article dives into the complexities of NWC and how important it is that the adjustment provisions in a purchase agreement are thoroughly articulated and understood by all parties involved before the deal is formally inked.

Our featured buy-side members this week include a full service creative agency, a company on a mission to modernize primary health care, and a Newport-based investment firm. On the sell-side we’ll introduce you to an 90 year old investment banking firm, and one of the earliest financial and strategic advisory firms focused in the cannabis sector.

Click here to follow Axial on LinkedIn and stay up to date on the latest trends in the world of Lower Middle Market deal making.


Axial

Featured Members

Kamchatka

Kamchatka
Corporation

Kamchatka is a full service creative agency that generates impact through creativity with brands or influencers.​​​​​​ In its short life, Kamchatka has won more than 50 national and international awards and works with clients such as Disney, Marvel, Pixar, Lucasfilms, Chandon Moët Henessy, DirecTV, Philips, Canon and Avon among others.

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Stephens

Stephens, Inc.
Investment Bank

Founded in 1933, Stephens is a privately-held, independent financial services firm focused on building value for companies, state and local governments, institutions and high-net-worth investors. Stephens is committed to establishing and maintaining long-term relationships based on integrity and trust and delivering long-term results based on deep research and independent thinking.

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PBG

Pacific Blackstone Group
Corporation

Pacific Blackstone Group (PBG) is on a mission to modernize primary health care by implementing leading edge digital technology to extenuate the constant demands faced by physicians & patients. Currently, the North American primary care sector is incredibly inefficient due to the underutilization of technology and lack of innovation. PBG intends to change that now.

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Viridian Capital Advisors

Viridian Capital Advisors
M&A Advisory Firm

In June 2014, Viridian Capital Advisors, LLC (“VCA”) was founded as one of the earliest financial and strategic advisory firms in the cannabis sector, with a team of seasoned investment bankers and analysts who brought capital raise, M&A and advisory transaction experience to the cannabis industry.

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Newport Harbor Group

Newport Harbor Group LLC
Independent Sponsor

Newport Harbor Group (“NHG”) is a private investment firm focused on acquiring small to medium-sized businesses where the owner is looking to transition out of their current role. NHG’s goal is to build upon the strong foundation in-place and supplement it with further investment to grow the business while preserving the company’s legacy.

​​​​​View Profile

Not an Axial Member yet?

This week from
Middle Market Review

Don’t Know These 10 SMB Business Brokers? You Should.​​​​​​
​​​Read More

No Ugly Babies in M&A
​​Read More

Riding the eCommerce M&A Wave
​​​​​Read More

Axial’s LMM Deal Digest: July 2021 Edition
​​​​​​Read More

Industry Trends

Net Working Capital in M&A

Source: Capstone Partners

Get in Touch

Reach out to dani.forman@axial.net to learn more

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