Best Working Capital negotiation strategy when owner wants to retain AR

by a searcher from INSEAD

Mar 01,2021

Does anyone have any comments to share on the best negotiation strategy when negotiating the working capital peg? I am mainly worried about the situation when the owner wants to retain the Accounts Receivable previous to the time of signing the Purchase Agreement. Any comments on that?

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searcher from Washington University in St. Louis - Olin Business School

Good approach

03/02/2021 | like reply | 0 likes

searcher from University of St. Gallen

Hi Pedro, I am running often into this discussion. Most of the time it helps to explain that you are acquiring and evaluating the company on a going-concern basis and hence including all operational assets as well as liabilities, such as Accounts Payables as well as Accounts Receivables. In my experience this normally helps kicking-off the discussion as the seller is now in a position where he would need to explain why he includes only AR and not also AP.

Please let me know, if you have any further questions on this one.

03/02/2021 | like reply | 2 likes

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