MCM Capital

Well Capitalized

Home Education Videos What Is Working Capital and Why Is It So Important?

MCM Capital Educational Video Series - What Is Working Capital and Why Is It So Important?

What Is Working Capital and Why Is It So Important?

What is working capital and why is it so heavily negotiated in M&A transactions? Justin Thomas from Cohen & Company joined us for a deep dive into working capital to discuss how it is calculated and how it impacts the sale of businesses.

See below for discussion topics.

Thanks for watching! If you would like to discuss an M&A topic in greater detail please reach out to one of our team members.

Discussion topics include:

  • Working capital definition 1:03
  • How does working capital affect purchase price? 2:57
  • How does the market most commonly calculate working capital requirements? 6:12
  • Is working capital affected by a business’s seasonality? 7:40
  • Example working capital calculation illustrating when it would positively or negatively impact purchase price 9:19
  • What is a working capital collar? 12:23
  • What items are most commonly miscategorized as working capital? 13:46
  • What is the goal of a working capital adjustment? 15:18
  • What is the most common reason for working capital adjustments? 17:18
  • How is deferred revenue viewed from a working capital perspective? 18:56
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.