Purchase price adjustments (PPA) can be beneficial to both the buyer and the seller. They incentivize the seller to operate the company as “normal” before closing, which protects the buyer; if the company is delivered with more working capital than expected, the seller is compensated. Key concepts related to the PPA mechanism, potential obstacles, and deferred revenue on the applicable calculations are illustrated in this document.
SRS Acquiom handles a large volume of working capital adjustments. If not crafted properly, they are a frequent cause of disputes after closing. Our experts can work with the merger parties to help mitigate these issues.