Working capital adjustments are one of the most misunderstood and financially significant parts of selling a business. Many founders assume the purchase price they see in the headline is what they will actually receive, but working capital targets and post-closing true-ups can materially increase or decrease proceeds. This video explains how working capital is calculated, why the working capital peg matters, and how poorly defined terms or unrealistic targets can shift millions of dollars away from the seller. Founders should carefully review definitions, normalization assumptions, and dispute procedures to ensure the final purchase price reflects the real economics of the business.
