medium · Private Equity & LBOs

If the buyer successfully argues this should be a 'debt-like' item instead of a working capital liability, how does this affect the equity purchase price?

1. The purchase price increases because net working capital rises
2. The purchase price decreases because debt-like items reduce equity value directly
3. It increases the management rollover requirement
4. The impact is neutral as long as the peg is consistently adjusted

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