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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.
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