Fig. 01 · Glossary
Net Working Capital
Also known as NWC, Working Capital Peg
Definition
Net working capital is current operating assets minus current operating liabilities, typically excluding cash and debt. In transactions, buyers and sellers set a normalized working-capital target so the business transfers with enough operating liquidity. SaaS and services firms often misread this because deferred revenue, receivables, prepaid expenses, and accrued delivery costs do not behave like manufacturing inventory.
The working-capital peg is where operating reality meets purchase price. A seller can win the multiple and still give value back at close if receivables, deferred revenue, prepaid expenses, or accrued delivery obligations are not normalized correctly.
The right time to model NWC is before LOI, not after the buyer’s QoE team has defined the peg.
Human Renaissance glossary · operator-grade definitions · Research methodology
