M&A Post-Closing Purchase Price Adjustments: Planning and Drafting Strategies

Defining Working Capital, Setting Baseline Amount, Specifying Accounting Principles, Navigating Overlap With Indemnification Clauses

Recording of a 90-minute CLE webinar with Q&A

Conducted on Thursday, May 25, 2017

Recorded event now available

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Program Materials

This CLE webinar will provide guidance to counsel drafting and negotiating purchase price adjustments (PPAs) provisions in M&A acquisition agreements.


PPAs provisions are a commonly-used mechanism in M&A transactions to enable the buyer to ensure that it receives the target company upon closing with sufficient net working capital (NWC) to be able to support its operations, so that the buyer doesn't need to make an infusion of cash into the target company soon after closing.

In addition to NWC-based adjustments, PPAs sometimes also adjust purchase price based on the target company's net assets, inventory, cash balance, accounts receivable collections and other financial measures.

PPAs can also be a way for the buyer to claw-back some of the purchase price that it paid for a target company with improperly calculated financial measures, so that the purchase price that it pays corresponds to the target company's actual value.

However, for sellers of companies in M&A transactions, PPAs can severely adversely impact their net sale proceeds and therefore need to be carefully crafted by their counsel to protect their rights.

Accordingly, counsel drafting PPA provisions in M&A acquisition agreements must focus on several key issues, including defining the elements that will comprise NWC or the other financial measure on which the PPA will occur, setting the target amount, specifying the accounting principles to be used in performing the PPA calculation, attaching example calculations to the acquisition agreement, burden of proof, mechanism for resolution of PPA-related disputes, payment of amounts due upon completion of the PPA process, and understanding the overlap between PPAs and general indemnification and tax indemnification provisions.

Listen as our authoritative panel of M&A attorneys discusses considerations and best practices for deal counsel when planning for and drafting PPAs in the acquisition agreement.



  1. Purchase price adjustment provisions—brief overview
  2. Planning and drafting strategies
    1. Defining working capital
    2. Setting the baseline amount
    3. Accounting methods/principles
    4. Overlap with indemnification provisions


The panel will review these and other key issues:

  • What issues should counsel take into consideration when drafting and negotiating PPA provisions in acquisition agreements?
  • What are the most commonly disputed issues with PPAs?
  • How can PPAs overlap with the general indemnification and tax indemnification provisions of the acquisition agreement?


McDonald, John
John J. McDonald

Troutman Sanders

Mr. McDonald counsels clients on a full range of corporate transactional matters, focusing on private equity and...  |  Read More

Weinsier, Michael
Michael Weinsier

Troutman Sanders

Mr. Weinsier focuses his practice on representing private equity and other investment funds, family offices and other...  |  Read More

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