Transactions excluding inventory

November 10, 2025

by a searcher from Cornell University in San Francisco, CA, USA

Has anyone completed a transaction that excludes inventory? We are looking to do a post-sale inventory buyback. As a result, we have taken inventory out of the net working capital calculation. I am trying to ID adjustments to the calculation - specifically, do we take inventory-related A/P out of the calculation, is there anything else that should be adjusted. I have spoken with a few folks, but there do not seem to be a lot of people who have encountered this structure.

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Reply by a professional
from Georgia Southern University in Atlanta, GA, USA

First off, ensure your purchase price reflects the discount for the lack of inventory (i.e., you aren't buying a business that can continue operating without additional infusion, so its not worth the same). Regarding NWC, you want to strip out anything associated with inventory given you aren't acquiring that asset. This would be any asset balances (inventory, prepaids, etc.) and any associated liability balances (AP, CC, etc.). The logic for stripping out the liabilities is you wouldn't expect to inherit liabilities associated with assets that you aren't acquiring.

Reply by a professional
from York University in Toronto, ON, Canada

Typical process is to exclude inventory from the WC calculation which you've done and then do a pre-closing inventory count + purchase price adjustment. Might be helpful to think of it as (Purchase price for business) + (Inventory amount). If there's concerns about what that amount will be, you can mitigate it with things like "max inventory amount will be $X" or "excludes inventory that's 90+ days old"

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