A Purchase Price Adjustment (PPA), or sometimes referred to as a working capital adjustment, provision should be carefully drafted considering the specific circumstances of the transaction and target company’s financials.

This reference sheet provides an example purchase price adjustment provision that demonstrates the various mechanics for parties to consider. It also includes key data points from more than 100 deals that closed in 2021 on which SRS Acquiom was engaged as the shareholder representative.

In addition to the example purchase price adjustment provision, below is a list of some of the questions the summary sheet answers:

  • What is the median timing to deliver the final statement?
  • What is the most used accounting methodology?
  • What is the median length of the seller’s review period?
  • What is the median period for “good faith” negotiations?
  • How is the Reviewing Accountant selected?
  • What is the median period for the Reviewing Accountant review?
  • How are fees allocated for the Reviewing Accountant?
  • What percentage of deals use a separate PPA escrow?
  • What is the median size of a PPA escrow?
  • What percentage of deals have a PPA threshold and what is the threshold amount?

Download the provision below.

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