Working Capital Adjustments for Vertical SaaS Independent Sponsors
When the deal is vertical SaaS and the question is Working Capital Adjustments, the structure decisions in the first 30 days outlast the next five years. This is where Jason Powell works.
The economics on a vertical SaaS platform deal usually hinge on a handful of structural decisions. Working Capital Adjustments is one of them.
The typical vertical SaaS platform sits at $10M to $200M EV with EBITDA in the $2M to $30M (or run-rate ARR) range. The thesis runs on platform plus adjacent module acquisitions inside a single end-market. The ARR number on the CIM is rarely the ARR number on the closing balance sheet. Reconcile 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 vertical SaaS, layer in ARR bridge built before LOI signing 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.
Capital after close is where the IRR actually gets made. The right introductions at month nine through month thirty are where this practice works as hard as it does at the LOI.
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Bring the vertical SaaS deal. Get Working Capital Adjustments done right.
Direct counsel from a securities and M&A attorney with billions in structured transactions, the independent-sponsor-native playbook, and the capital markets network that opens up post-close.