NWC Peg Calculator.
The working capital peg is where headline prices quietly move. Enter twelve month-end balances to see the trailing-twelve-month peg, how much it swings, and what the buyer actually pays once cash, debt and the closing adjustment are counted.
Inputs
What the closing balance sheet will deliver.
Quoted cash-free, debt-free.
Peg and price
- TTM average
- $4,000,000
- TTM median
- $3,950,000
- Last 3 months
- $3,900,000
Monthly volatility
- Low to high
- $1,000,000
- Std deviation
- $276,887
- Variation
- 6.9%
What this means in negotiation
- Strength: Working capital is steady (7% variation), which makes the peg easy to defend.
- Watch: Closing below the peg costs $500,000 dollar for dollar. Collecting receivables or timing payables before close can close that gap.
How the peg works
What goes into net working capital
Trade receivables, inventory and prepayments, less trade payables, accruals and deferred revenue. Cash, debt and tax balances are left out because a cash-free, debt-free deal settles them separately. Agree the exact line items in the LOI, not at completion. See the working capital peg definition (opens in a new tab).
Choosing the method
A trailing-twelve-month average smooths out seasonality and is the usual starting point. A median ignores one-off spikes. A last-three-month average suits a business whose working capital is genuinely trending, and works for the buyer when that trend is rising. Pick the method that reflects how the business normally runs.
Cash-free, debt-free
The headline price is an enterprise value. The seller keeps the cash and repays the debt, so equity value is enterprise value plus cash, less debt and debt-like items, plus or minus the gap between closing working capital and the peg. Every dollar of shortfall comes off the price.
Why volatility matters
When month-end balances swing widely, the closing date alone can move the price. A high variation is a reason to fix the method early and, where useful, to agree a collar so small differences are ignored. Check the knock-on effect on the offer with the LOI Value Decoder.
This tool is for indicative modelling purposes only. Working capital definitions, accounting policies and completion mechanics vary by deal and jurisdiction. Results do not constitute financial, legal, or tax advice. Your accountants and legal counsel should confirm the peg and the completion accounts.
Negotiating a peg? Have Acquiry model it with your numbers before the LOI is signed.
Buy-side and sell-side mandates across any sector and any market. If it is a real transaction, bring it to us.