We are forty-five days post-LOI and the buyer's legal team is demanding a net working capital calculation that excludes aged inventory we know is salable. How do we resolve this without blowing up the deal?

Question

Tyler Smith · Accepted Answer

This is a classic late-stage negotiation tactic designed to chip away at your cash-free, debt-free proceeds right before closing. The buyer wants to write off your aged inventory to drive down the net working capital peg, forcing you to leave more cash in the business to cover the gap.

To defeat this, do not get emotional. Turn to your structured data. Use your inventory management system and sales records to prove the historical velocity of this specific class of inventory. If your inventory turnover ratio shows that older stock consistently sells within a twelve-month cycle, present this as objective evidence.

Bring this issue straight to your next leadership team meeting and run it through the IDS® process. Identify the specific SKUs the buyer is targeting. Put together a clean liquidation report showing that these items are actively moving, even if the sales cycle is slower.

If the buyer remains stubborn, suggest a compromise structured around a post-closing adjustment or a true-up mechanism. Offer to place the disputed inventory value into an escrow account for ninety days post-close. If the inventory sells during that period, the escrowed funds are released to you. If it does not sell, the buyer keeps the funds. This shifts the debate from subjective speculation to actual performance, protecting your deal structure while keeping the transaction on track for a successful close.