We covered what it means for a transaction to be cash-free, debt-free (see this post) and what it means to set the right net working capital peg (see this post). Today, we chat through the final stage — the completion…
The net working capital (NWC) peg is the target amount of capital required to operate the business at time of acquisition. Sellers want to negotiate a lower peg and deliver higher actual NWC at close, and vice versa for buyers.…
What does cash-free, debt-free have to do with working capital? Well, pretty much everything. Your purchase agreement will define what happens with every single line item on the balance sheet. Specifically, each line item within assets and liabilities will fall…
I spoke to a private equity investor recently. He described a recent sell-side process for one of their portfolio companies. They basically had no bake-off to vet investment bankers. They knew who their advisor would be – a middle-market bank…
Here’s a recent case study of a successful deal. About three years ago, a private equity investor connected with a CFO at a larger private company. The conversation touched on a portfolio company owned by the private equity firm. The…
I’ve watched strong deals unravel late in a process – not because the business was fundamentally weak, but because diligence uncovered issues that should have been addressed months earlier. Things that, if surfaced ahead of launching a process, could have…
The Quick Take: A typical transaction process often feels like it needs to be a race against time. But shortcuts in early preparation can lead to a “domino effect” of missteps in the later stages of a process. By leveraging…