If an asset purchase agreement or stock purchase agreement has net working capital built into the purchase price, it is likely that the agreement also calls for a true-up of the purchase price subsequent to closing to account for the true or accurate amount of the net working capital or other issues and variables that were baked into and part of the purchase price. Generally the true-up will occur within 60 – 120 days after closing. For example, you may be buying or selling a business for $1M and the working capital of the business in an amount of $100,000 was a portion of the purchase price. The terms would generally state that after closing the buyer will provide the seller with their figures relating to what the actual working capital was. If the actual net working capital was greater than the $100,000, the buyer may owe the seller the difference and if the actual net working capital was less than the $100,000, the seller may owe the buyer the difference. The actual terms will be dictated by your agreement but if you have any questions regarding your purchase agreement you can speak with a business attorney at The McGuire Law Firm.
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Can an Asset Purchase Agreement have a purchase price true-up? What does it mean to true-up an agreement or asset purchase agreement? If Net Working Capital is part of an acquisition how is it trued-up? What adjustments does an asset purchase agreement call for? Denver Business Attorney, Denver Small Business Attorney, Denver Business Lawyer, Denver Small Business Lawyer, Purchase Price True-Up, Purchase Price Adjustments.