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Mastering NWC Mechanisms
“Really great and engaging course. I would recommend to anyone interested in learning more about the topic. I enjoyed hearing about the instructor’s and participant’s real-world examples and discussion points.”- NWC Course Participant
Duration:~4 Hours
CPE Credits:4.5
Experience Level: Emerging M&A Pros | Mid-Career M&A Pros | M&A Leaders
What I will learn?
- Understand net working capital and its impact on deal economics.
- Learn to negotiate net working capital terms that balance buyer and seller interests for optimal deal structures.
- Gain insights into the negotiation process, adjustments, and the motivations of transactional parties.
- Comprehend the relationship between accounting, financial, and legal considerations in shaping net working capital agreements.
- Apply best practices in managing net working capital to enhance deal value and minimize risks.
- Document net working capital agreements to reflect negotiated terms and protect business interests.
About The Course
Equip yourself with the knowledge to effectively analyze, negotiate, and document net working capital mechanisms to gain or preserve incremental deal economics. Participants learn how the accounting, financial, and legal considerations relate to effectuate a beneficial outcome.
Course Curriculum
- Net Working Capital Defined
- NWC and the Cash Conversion Cycle
- Ways Businesses Finance NWC Needs
- How NWC Needs Vary Across Industries & Businesses
- NWC Optimization
- Fluctuations In NWC as Sources & Uses of Cash
- The Multiple Ways NWC Can Impact Purchase Price
- NWC’s Impact on Free Cash Flow (“FCF”)
- NWC as a Purchase Price Adjustment Mechanism
- How to Think About “Normal” Levels of NWC in a Business
- NWC and NWC Targets in Seasonal Businesses
- Analogy: How to Think About NWC as Gas in the Car
- How NWC Targets Get Negotiated in M&A Transactions
- Buyer vs. Seller Perspectives and Motivations
- Three Junctures When NWC Typically Gets Calculated During a Sale Process
- Impact of NWC Target on “Same Price” Offers
- How NWC Targets Are Usually Calculated
- Considerations for NWC Targets Expressed as a Discrete Value vs. as a Formula
- Select Best Practice Tips for Buyers and Sellers
- Managing NWC Tighter Post Close as a Valuation Creation Strategy
- Exercise: Adjustments to NWC
- Determining Adjustments to NWC: Review Common Categories Checklist
- Cash-free, Debt-Free Considerations
- Income Tax Asset & Liability Adjustments
- Sub-Account Detail & Trial Balance Level Analysis
- Management Fee Adjustments
- One-Time, Non-Recurring Items Adjustments
- Accounting Considerations as Possible NWC Adjustments
- Special Considerations: Seasonality
- Special Considerations: Negative NWC Businesses
- Special Considerations: Impact of Significant Revenue Growth or Decline on NWC
- Special Considerations: Project Based Businesses and NWC
- Comparing Adjusted vs. Unadjusted NWC—Building Intuition
- Guiding Question to Determine Inclusion or Exclusion of an Account from NWC Analysis
- NWC Negotiating Tricks & Other Practical Considerations
- One-Way vs. Two-Way Tests
- Collars and Caps
- Locked Box Mechanisms as an Alternative to NWC Mechanisms
M&A Professions
- Financial Due Diligence
- Investment Banking
- Leveraged Lending
- Private Equity
CPE Credits
Details
- Last Updated November 2024
- CPE Credit 4.5
- Field of Study Finance
- Instructional Delivery Method Group Live
- Knowledge Level Basic
- Prerequisites None
- Advanced Preparation None
Refund Policy
For more information regarding refunds, concerns, and program cancellation policies, please contact the Private Equity Primer Support Team via email at help@pe-primer.com.
Compliant Resolution
For any complaints or issues with course materials or delivery, please email the Private Equity Primer Support Team at help@pe-primer.com.
NASBA Sponsor Statement
Private Equity Primer is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org
Course Requirements
To ensure an effective learning experience for all participants, the following requirements must be met:
- Personal Computer Running Microsoft Excel (PC required). We strongly advise against using a Mac. Excel hotkeys differ on Macs, and Mac-specific commands and will not be taught as part of this course.
- Full-Sized Keyboard Recommended. Keyboards with single-function F-keys and a full ten-key number pad greatly improve efficiency for Excel-based exercises.
- Two (2) Computer Monitors are Required. This allows participants to simultaneously view the instruction screen and complete exercises in Excel or other tools as directed.
- Functioning Computer Camera. Cameras must remain on throughout all live sessions. Failure to comply may result in removal from the course without refund.
- Reliable High-Speed Internet. Reliable, high-speed internet connection that supports continuous video and audio streaming.
- Ability to Log into a Microsoft Teams. Access to Microsoft Teams videoconference (or similar service as may be used by PE Primer from time to time).
- Timely Completion of Asynchronous Material. Participants must complete the asynchronous digital M&A Bootcamp material before the first live virtual session.
Environment & Participation
- Quiet, Professional, Non-Public Workspace. Make sure your workplace is a quiet, professional, and non-public location without visual or auditory distractions. Headphones with a microphone may be necessary based on your setup.
- Active Participation is Required. Participants are expected to:
- Ask and answer questions,
- Offer perspectives during discussions,
- Contribute meaningfully to group work, and
- Engage fully during case studies and Excel exercises.
Help us prioritize the next cohort.
Join the interest list and receive early access when we announce dates.
Benefits Obtained :
- Mastering NWC negotiations
- Learn Alongside Other M&A Professionals
- CPE Credit
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Private Equity Primer is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: NASBAregistry.org.
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