Working capital adjustments or purchase price adjustments in an APA

by a lender from Nova Southeastern University

3 years ago

I just wanted to share this important point when it comes to working capital.  Please be sure that in your purchase agreement you address any working capital changes be "Trued-Up" and omit the word "adjustments".  SBA does not like to see this word and it can be construed as a price adjustment, which then could effect the deal structure.  Just trying to save you some back and forth with legal.  Hope this point is helpful!  Bruce

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lender from Nova Southeastern University

Each deal is different of course and what's included as part of "working capital". You can use the phrase "true-up" just not "adjustment" as SBA will not allow an "adjustment" to the purchase price even if the buyer will benefit.

2 years ago | like reply | 1 like

searcher from University of Massachusetts Amherst - Isenberg School of Management

^Searchfunder member‌ thanks for this tip. Do you have sample language you could share on this point?

2 years ago | like reply | 0 likes

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