Working Capital Adjustments for Aerospace & Defense Independent Sponsors
Negotiating Working Capital Adjustments on aerospace and defense deals, with the structure protection and capital connectivity an independent sponsor actually needs.
The economics on a aerospace and defense platform deal usually hinge on a handful of structural decisions. Working Capital Adjustments is one of them.
The typical aerospace and defense platform sits at $15M to $200M EV with EBITDA in the $3M to $30M range. The thesis runs on tier-two or tier-three supplier consolidation with certifications as moat. Foreign LP capital can trigger CFIUS review on the cleanest of deals. Map the cap table early.
How Working Capital Adjustments actually gets structured.
Set the peg based on a trailing 12-month average, normalized for seasonality.
Define each line item in the schedule, especially deferred revenue and accrued vacation.
Cap the dispute resolution timeline at 30 days post-close.
Build a true-up payment mechanism funded out of escrow.
In aerospace and defense, layer in ITAR / EAR registration transferred or refiled before close as part of the Working Capital Adjustments workstream.
Using an unadjusted average that ignores seasonality. You pay twice for the same cash.
"Working capital is where deals are won or re-traded after LOI. Read every line of the schedule."Jason Powell · Working Capital Adjustments
The deal is one thing. The capital that opens up after close is another.
Most independent sponsors solve the closing capital and then run into the post-close capital problem alone. The capital markets relationships that matter at month 18 are part of this practice.
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Working Capital Adjustments for Aerospace & Defense, on independent sponsor terms.
Independent sponsor counsel that already speaks fluent deal-by-deal economics, structures clean LPAs, and travels with capital markets relationships for what comes after close.