Food & Beverage Deals: Working Capital Adjustments Done Right
Independent sponsor counsel for food and beverage, focused on Working Capital Adjustments and the deal mechanics that protect sponsor economics and LP alignment.
An independent sponsor closing food and beverage transactions in the $10M to $120M EV range has a defined set of moves at the Working Capital Adjustments stage. Most of them are not in a generic M&A textbook.
The typical food and beverage platform sits at $10M to $120M EV with EBITDA in the $2M to $20M range. The thesis runs on CPG roll-up or co-packing platform with regional bolt-ons. Treat trade spend like a working capital item, not a marketing line. The valuation moves accordingly.
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 food and beverage, layer in co-pack capacity agreement re-papered 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.
Refinancing, recaps, growth rounds, and the right strategic conversation eighteen months early are all downstream of relationships that take years to build and minutes to use.
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An LOI on the desk, a food and beverage target, and a Working Capital Adjustments question worth a real conversation.
Twenty minutes of practitioner-grade input from a securities attorney whose first move is to read the deal, not the engagement letter.