30/05/2026
Most business owners negotiating a sale think the headline number is what they're actually getting.
Then closing day happens and they discover the working capital peg just cost them six figures.
I'm talking about $75, 000 to $250, 000 walking out the door because nobody actually defined what "normal operating working capital" meant in the purchase agreement. The buyer agreed to $5.8 million. You thought you were getting $5.8 million. But the peg adjustment at closing? That's where the real negotiation happens.
Here's what kills me about this. Sellers fixate on the headline price. They negotiate EBITDA adjustments. They survive diligence. They get emotionally tied to the deal. And then in the final stretch, the buyer uses a loosely drafted working capital definition to reduce what shows up in the wire transfer.
It's not a technicality. It's purchase price by another name.
The peg tells the buyer how much short, term operating liquidity needs to stay in the business to run normally on day one. Accounts receivable, inventory, accrued payables, that kind of thing. But there's no universal definition. Every deal turns on what your purchase agreement actually says, what the closing statement shows, and which accounting policies control the true, up.
A seller who assumes their controller's balance sheet labels will control the calculation is asking for trouble.
What makes this worse in today's market is financing pressure. Prime is sitting at 6.75%. SBA acquisition loans are running near 9.75%. When a buyer is carrying that much debt, they care obsessively about day, one liquidity and whether the business can support the debt service without them writing another check on Tuesday morning.
That's why serious buyers use the peg as a risk allocation tool. If they think you have weak receivable collection, slow inventory turns, or under, accrued liabilities, they push for a higher peg and harsher reserve policies. The peg becomes part of the price negotiation, not an afterthought.
If you're selling a business, the working capital peg needs the same attention as enterprise value. Get it right in writing. Get it right in the closing statement. Because that number determines what actually hits your account.
How clearly is your working capital peg defined in your current deal, or are you still treating it like a minor detail? Midwest Business Brokers
The working capital peg is where a lot of Indiana sellers discover the headline price was never the wire number. They negotiate enterprise value hard…