easy · Private Equity & LBOs
If a company has a highly seasonal business, how might a buyer and seller adjust the peg methodology?
- By using a seasonally-adjusted average or a specific 'reference' month that matches the closing date.
- By ignoring working capital adjustments entirely during the off-season.
- By doubling the peg during high-demand months to ensure the buyer has extra liquidity.
- By setting the peg equal to the highest point of the previous year's inventory build.
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