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

[@alpcelimli7311]

Great questions & answers. Thanks for your effort

[@sencanboz2645]

synergy effects of the TARGET working capital

[@sencanboz2645]

Initial purchase price vs. current price

[@shubhendukumar1972]

Very insightful and pragmatic interview,
Thanks a lot for your efforts

[@sencanboz2645]

Kevin sells a used car to a new owner / a potential buyer.