What Is Working Capital And Why Is It So Important?

What is working capital and why is it so heavily negotiated in M&A transactions? Justin Thomas from Cohen & Company joined us for a deep dive into working capital to discuss how it is calculated and how it impacts the sale of businesses. 1:03 - Working capital definition 2:57 - How does working capital affect purchase price? 6:12 - How does the market most commonly calculate working capital requirements? 7:40 - Is working capital affected by a business's seasonality? 9:19 - Example working capital calculation illustrating when it would positively or negatively impact purchase price 12:23 - What is a working capital collar? 13:46 - What items are most commonly miscategorized as working capital? 15:18 - What is the goal of a working capital adjustment? 17:18 - What is the most common reason for working capital adjustments? 18:56 - How is deferred revenue viewed from a working capital perspective?