Get Active in Our Amazing Community of Over 455,000 Peers!

Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Case Partners to connect and practice with!

What are typical working capital adjustments that are made for an M&A transaction?

accounting Corporate Finance Deals Deals Strategy M&A
New answer on Sep 25, 2019
1 Answer
2.0 k Views
Anonymous A asked on Sep 21, 2019

If Company A is acquiring Company B and they hire a company to do the due diligence, what are typical adjustments that would be made to working capital? thanks,.

Overview of answers

  • Upvotes
  • Date ascending
  • Date descending
Anonymous replied on Sep 25, 2019

Hi there,

Usually the type of adjustments made relate to positions which are "not normal" in the day to day running of the business. In the case of working capital you would be looking at Receivables (outstanding invoices to customers), Payables (outstanding invoices with suppliers) and Inventories positions in the balance sheet. As an example, if you have a significant equipment sale which has resulted in outstanding Receivables and the business normally sales products, this would be an adjustment to consider.

I hope this helps.

Best, Fernando

Was this answer helpful?
How likely are you to recommend us to a friend or fellow student?
0 = Not likely
10 = Very likely
You are a true consultant! Thank you for consulting us on how to make PrepLounge even better!