Working capital peg
The working capital peg is the agreed normal level of working capital the business must have at closing; any shortfall or excess adjusts the price.
In a sale
How does the working capital peg change the price?
If the business is delivered at closing with less working capital than the peg, the price comes down; with more, it goes up. The working capital peg is one of the terms founders most often meet too late. Where the peg is set is negotiated, and it is best settled while several buyers are still at the table.
Where it comes up
Read it in context
In the articles
- Where founders leave money on the tableMost of what founders lose in a sale is lost in their own decisions, and each one has a fix.
- Same business, two outcomesTwo identical businesses, one prepared and one not, sell for very different prices.
- What an LOI is really sayingThe headline is one term of nine. Here are the other eight.
- When a buyer calls firstAn inbound offer is information, not a decision.
- Structure is priceTwo offers with the same headline can differ by millions in what you keep.
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.