Close · Building Products

Working Capital Adjustments for Building Products Independent Sponsors

Securities and M&A counsel for independent sponsors negotiating building products transactions, from LOI to close to the capital markets that open up afterward.

EV range $10M to $150M EV EBITDA $2.5M to $25M Audience Buy-side / Sponsor
The deal context

Building Products deals in the lower middle market run a specific playbook. Working Capital Adjustments is where the structure either holds or starts to leak.

The typical building products platform sits at $10M to $150M EV with EBITDA in the $2.5M to $25M range. The thesis runs on regional manufacturer or specialty distributor consolidation. Pricing power lives in dealer contracts, not in branding. Read the dealer agreements before the LOI.

The moves

How Working Capital Adjustments actually gets structured.

  1. Set the peg based on a trailing 12-month average, normalized for seasonality.

  2. Define each line item in the schedule, especially deferred revenue and accrued vacation.

  3. Cap the dispute resolution timeline at 30 days post-close.

  4. Build a true-up payment mechanism funded out of escrow.

  5. In building products, layer in raw-material pass-through clauses confirmed as part of the Working Capital Adjustments workstream.

The common mistake

Using an unadjusted average that ignores seasonality. You pay twice for the same cash.

Jason's take
"Working capital is where deals are won or re-traded after LOI. Read every line of the schedule."
Jason Powell · Working Capital Adjustments
Capital after close

The deal is one thing. The capital that opens up after close is another.

After close, the call list for refinancing, recapitalization, and growth equity gets short and known. Jason carries that list.

MONTH 18
Senior refi
MONTH 24
Dividend recap
MONTH 36
Growth equity
YEAR 4–5
Strategic exit
ENGAGE THE PRACTICE

Working Capital Adjustments for Building Products, 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.