In a company sale, most of the negotiation energy goes into the EBITDA multiple, net debt, and earn out mechanics. One parameter gets far less airtime and still moves the final price significantly: working capital. Mishandled, it becomes a source of friction at closing. Mastered early, it contributes to a balanced deal.

According to the Vlerick M&A Monitor 2025, valuation by multiples (revenue, EBITDA) remains the dominant approach in Belgian transactions, used in 72% of deals. In that setup, working capital is a key adjustment variable. It directly influences what the buyer actually pays the seller on closing day.

What working capital actually is

Working capital represents the financial resources required to fund the operating cycle. Most SME owners already track it closely, often without formalising it in transactional terms.

In practice, it is the gap between operational current assets (trade receivables, inventory) and operational current liabilities (trade payables).

For Belgian SMEs, working capital often acts as an implicit source of financing, particularly through supplier payment terms. That quiet role is exactly what makes it a sensitive topic once a transaction is on the table.

Why working capital must be normalised before a sale

In an M&A context, working capital at any given date does not necessarily reflect the business in steady state. It must be normalised, in the same way EBITDA is normalised.

Ahead of a sale, it is not uncommon to see practices that temporarily flatter the cash position. Accelerating customer collections. Delaying supplier payments. Running inventory down. These moves improve working capital in the short term, but they transfer a future financing need to the buyer, and a serious buyer will spot it in due diligence.

Normalisation adjustments typically cover seasonality, one time projects, obsolete inventory, aged receivables, and accruals that are not recurring. The goal is a normative working capital figure that reflects the company's structural need, not a snapshot engineered for the deal.

The role of working capital in the EV to Equity Value bridge

This is where working capital takes on its full transactional weight. When a price is derived from an EBITDA multiple, the Enterprise Value implicitly assumes a normalised level of working capital required to run the business.

Between the valuation reference date and the closing date, working capital moves. That variation (ΔWC) is captured in the bridge from EV to Equity Value, following this logic:

Equity Value = EV − Net Debt − ΔWC

The mechanics are intuitive. An increase in working capital (positive ΔWC) means more cash is tied up in the operating cycle. It is a use of cash that reduces the value flowing to shareholders. A decrease in working capital (negative ΔWC) releases cash and adds to Equity Value.

A protection mechanism for the buyer

This adjustment is not just an accounting exercise. It protects the buyer against real risks: weak receivables monitoring, deterioration of the customer portfolio, longer collection timelines.

An apparent improvement in working capital driven by a jump in receivables does not guarantee future collection. The bridge captures the variation precisely to prevent the buyer from paying for additional working capital whose realisation is still uncertain.

Anticipate to negotiate better

For both seller and buyer, mastering working capital upstream of the transaction is a strategic advantage. The earlier it is analysed, the easier it becomes to agree on a realistic normative level, avoid surprises at closing, and reduce the risk of disputes after the deal is signed.

Working capital is not a closing week technicality. It is a material part of the price, and it deserves the same preparation as EBITDA and net debt.

The dups approach

At dups, we treat working capital as a negotiation lever, not an adjustment to be discovered in the final days before closing. We work with shareholders to analyse and normalise their working capital position early in the process, so it enters price discussions as a prepared input rather than a surprise in the bridge. If you are considering a transaction and want a clear view of where working capital could move the deal value, let us talk.