Buyers typically have 60 to 90 days following the closing date to finalize a proposed closing date balance sheet, working capital adjustments and net working capital calculation. In contrast, under most merger agreements, the shareholder representative may have only 20 or 30 days to review, research and approve or object to that submission.

It typically takes longer for a shareholder representative to review working capital calculations when material adjustments might be made, because both the number of issues and the complexity of such issues tend to increase as the amount of the adjustment increases. To address this, consider adding additional time for the shareholder representative’s review of the buyer’s calculations when the adjustment being sought is in excess of a certain threshold. SRS Acquiom suggests language along these lines:

In the event that Buyer shall deliver an Adjusted Working Capital Statement to the shareholder representative, then the shareholder representative may dispute any item or amount set forth in the Adjusted Working Capital Statement at any time within thirty (30) calendar days following receipt of the Adjusted Working Capital Statement; provided, however, that such response period shall be increased to sixty (60) calendar days in the event that the Adjusted Working Capital Statement delivered by Buyer would, if accepted, result in a Shortfall Amount of more than [$ ].

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