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Navigating Working Capital Adjustments in Business Transactions
Exploring the financial implications and disputes related to working capital adjustments post-closing in business deals, emphasizing the importance of resolving these issues pre-closing. The chapter covers common disputes in mergers and acquisitions, including working capital discrepancies, setting target working capital, buyer's analysis post-close, and earnouts as a contentious compensation method. It delves into measuring working capital consistency, reserves accounting, differing methodologies, estimation subjectivity, and potential consequences for sellers in negotiations.