The purchase price is settled, and the deal is now being fought over a number neither of you originally negotiated: the working-capital peg. Work through these in order and you will know what the peg actually is, the month it gets set on, how the adjustment runs after closing, and where it goes wrong when a clause is not precise enough to survive a real dispute.
What you'll be able to decide
STAGE ONE OF FOUR
Before arguing about the number, be clear on what kind of number it is.
Article
Normal working capital and how it is measuredThe peg is not a formula — it is a negotiated target built from the business’s own history. Start here.
Definition
Net working capital pegThe precise definition: the pre-agreed target measured against the actual closing-date figure to calculate the adjustment.
Article
Setting the working capital target fairlyWhy a flat trailing average quietly penalizes a seasonal business depending on when the deal happens to close — and how to set the peg fairly instead.
STAGE TWO OF FOUR
Two categories of item that look like they belong in a standard peg, and usually do not.
Ask an Expert
Does working capital capture a take-or-pay commitment?Whether a take-or-pay purchase commitment belongs inside the peg — usually not, and why.
Ask an Expert
Is a construction holdback part of working capital?The same question for a statutory construction holdback — a different answer, and a common drafting mistake.
Case file
Statutory holdback is not working capitalWhat happens when that mistake actually ships: ten per cent of every contract treated as money the target could collect, when it legally could not.
Case file
Debt-like items that were also excluded from working capitalA related error running the other way: the same items deducted twice, once from enterprise value and once again from the working-capital calculation.
STAGE THREE OF FOUR
This is where most disputes actually live: not in the number, but in the accounting policy behind it.
Guide
Settling the working capital adjustment after closingWhy a post-closing true-up fight is almost always about accounting policy, not the numbers — and the drafting choices that decide it before the dispute starts.
Case file
A working capital peg set on the wrong monthThe case this path is named for: a reference balance sheet dated to a shareholder vote, which happened to land in the seller’s slowest month.
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When a closing statement clause conflicts ASPE and past practiceWhat happens when the clause itself points two directions at once — ASPE on one hand, past practice on the other.
Case file
A closing statement that followed the wrong half of its own clauseA real version of exactly that conflict, and which half the closing statement actually followed.
STAGE FOUR OF FOUR
If the parties still cannot agree, how the dispute actually gets decided, and what happens when nobody raises it in time.
Ask an Expert
What's the difference between arbitration and expert determination?Most working-capital disputes are not sent to arbitration at all — know the difference before you assume a court can review the result.
Case file
Expert determination is not arbitrationWhat happens when both sides had been calling it 'the arbitration clause' for months, and it was never that.
Case file
Objection window lapsed and the closing statement became finalThe other way this ends: a real $190,000 error, found two days after the objection window closed.
Guide
Working through the closing checklistOnce the number is settled, what else actually has to be true on the day funds move.
Once the closing numbers are locked, what is left to check is how much the business still depends on you personally — the harder thing to fix after signing.
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