---
title: "Working capital and the close-date true-up, Route Valuation Mastery"
url: https://poolroutemarketplace.com/learn/valuation-mastery/working-capital-true-up
description: "Most route deals are \"cash-free, debt-free with a normalized working capital target.\" Translation: at close, the buyer assumes a baseline of working capital (pr"
lang: en
---

# Working capital and the close-date true-up

Lesson 7 of 10 · 7 min read

Most route deals are "cash-free, debt-free with a normalized working capital target." Translation: at close, the buyer assumes a baseline of working capital (prepaid customer revenue, deposits, etc.) and the price gets adjusted up or down for any deviation.

**Why it matters.** If a customer prepaid 6 months of service in January and you close in March, the buyer is on the hook to deliver 4 months of service the seller already collected for. Without a working-capital true-up, the buyer effectively pays for that revenue twice.

**Common items.**

\- Prepaid customer revenue (advance payments for service not yet delivered)
\- Customer deposits or credits
\- Outstanding accounts receivable (often excluded, seller keeps and collects)
\- Inventory (chemicals, parts) on hand
\- Prepaid software subscriptions

**The mechanics.** APA defines a "target" working capital figure (often the trailing 12-month average). On close day, both sides agree to an estimated close-date balance sheet. Within 60–90 days, an actual balance sheet is finalized; the difference flows as a payment one direction or the other.

**Typical adjustment size.** $5k–$30k for a mid-size route. Worth getting right.

**Pitfalls.** Sellers who collected a big batch of prepaids right before close (artificially boosting cash, creating buyer liability). Buyers who don't read the working capital schedule carefully. Disputes over what's a current vs. long-term liability.

Get an accountant on each side reviewing the working capital schedule before signing the APA.

## Quick check

\1. What does a working capital true-up protect against?

\2. What's commonly excluded from the deal?

\3. Red flag working-capital pattern from a seller?

\4. Why true-up working capital at close?

\5. Common items in the working capital schedule?

\6. Working-capital true-ups are only relevant in deals over $5M.

Earn 45 points

Mark this lesson complete

← Previous lesson: https://poolroutemarketplace.com/learn/valuation-mastery/earnouts-and-contingent
Next lesson →: https://poolroutemarketplace.com/learn/valuation-mastery/valuing-recurring-vs-onetime

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