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Working Capital Peg Estimator: Trailing NWC Averages, Seasonality and Peg vs Closing
In a deal, the working capital peg sets how much net working capital the business should hand over at closing. Set it too low and the buyer overpays; set it too high and the seller gives value away. Both sides usually start from the same place: month-end net working capital over a trailing period.
Enter 12 to 24 months of NWC and the estimator returns the full-period average, the trailing 3, 6 and 12-month averages, the minimum and maximum, the seasonality range, and how a proposed peg compares with them. Add an estimated closing NWC to see the difference from the peg. This is a planning aid: the purchase agreement defines net working capital and the peg, and this is not legal advice. The example values are illustrative; replace them with yours.
Trailing net working capital
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Proposed peg and closing
Your results
Average over 18 months
$4,563,889
Simple average of the month-end values.
Trailing 12-month average
$4,617,500
Most recent 12 months.
Trailing 6-month average
$4,968,333
Most recent 6 months. Moves more with recent growth or seasonality.
Trailing 3-month average
$5,123,333
Most recent 3 months.
Seasonality range (high minus low)
$1,160,000
Low $4,050,000 (Dec-25), high $5,210,000 (Aug-26). Range is 25.4% of the average.
Proposed peg vs the data
The peg of $4,650,000 is +$86,111 against the 18-month average, +$32,500 against the trailing 12 months, −$318,333 against the trailing 6 and −$473,333 against the trailing 3. It sits within the range of month-end values observed.
Closing NWC minus peg
+$390,000
Positive means closing NWC is above the peg. Whether and how that moves the price (dollar-for-dollar, collar, escrow) is set by your purchase agreement.
Planning aid only. The purchase agreement defines net working capital, the accounting principles used, any exclusions and the peg itself. This tool is not legal, tax or accounting advice; have your counsel and accountants confirm the definitions and the numbers.
Free template · Excel workbook
Working Capital Peg Workbook
Build the trailing net working capital average, normalize adjustments, and test a proposed peg against closing NWC.
Illustrative example values are prefilled; replace them with your own. Everything is calculated in your browser, and Performis does not store what you enter. Our analytics record which calculator was used and a few summary figures, such as a rounded result.
The formulas
- Average NWC
- Σ month-end NWC ÷ number of months
- Trailing N-month average
- Average of the most recent N month-end values (N = 3, 6, 12)
- Seasonality range
- Highest month-end NWC − lowest month-end NWC
- Range as % of average
- (max − min) ÷ |average| × 100
- Peg vs average
- Proposed peg − average (or trailing average)
- Closing NWC vs peg
- Closing NWC − proposed peg
How to interpret your result
Compare the averages before choosing one
If the 3-month average is far above the 12-month average, NWC is rising with growth or seasonality. Each party may prefer a different window, so know the spread before negotiating.
Place the closing month in the seasonal range
If closing falls near the high or low of the range, a flat-average peg will produce a large adjustment. A seasonal or monthly peg may be worth raising with your advisers.
Test the peg against the observed range
A peg outside the range of month-end values you actually observed deserves an explanation, such as a change in terms, a customer shift or a definition difference.
Normalize the series first
One-off items, acquired balances or a change in accounting policy can distort individual months. Quality-of-earnings work typically adjusts for them before a peg is set.
Remember the agreement decides
Definitions, exclusions, accounting principles, collars and dispute mechanics sit in the purchase agreement. Use this output to prepare questions for counsel and accountants, not to replace them.
Frequently asked questions
What is a working capital peg?
In an acquisition, the working capital peg is the target level of net working capital the business is expected to deliver at closing. If closing NWC differs from the peg, the purchase price is typically adjusted. The exact mechanics are defined in the purchase agreement.
How is a working capital peg usually estimated?
A common starting point is an average of month-end net working capital over a trailing period, often 12 months, adjusted for seasonality, growth and one-off items. Buyers and sellers often argue for different averages, which is why this tool shows the 3, 6 and 12-month figures side by side.
Why does seasonality matter for the peg?
If net working capital swings through the year, a closing in a high month against a flat average peg shifts value between the parties. The range between your highest and lowest month shows how large that swing could be.
What goes into net working capital here?
Whatever the purchase agreement says. Definitions often exclude cash, debt, income taxes and certain accruals. Enter NWC computed on the same basis for every month; this tool does not decide what is included.
Does a positive delta mean the buyer pays more?
In a simple dollar-for-dollar mechanism, closing NWC above the peg typically increases the price and below it decreases the price. Many agreements add collars, escrows or true-up periods, so the agreement controls. This is a planning aid, not legal advice.
Is my data stored or sent anywhere?
No. The estimator runs entirely in your browser, collects no personal information, and does not save what you type.
Take it further with a template
Free template · Excel workbook
Working Capital Peg Workbook
Build the trailing net working capital average, normalize adjustments, and test a proposed peg against closing NWC.
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