Three clauses decide whether the agreed number is the number that gets paid: the peg, the true-up and the mechanism for resolving a disagreement about either. A purchase price adjustment attorney in Meridian reads them in that order, because almost nobody else reads them at all.
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Quick answer
Most purchase agreements assume the business is delivered with a normal level of working capital. The peg states what normal means, the true-up compares the actual position at closing against it, and the difference moves the price up or down. A dispute clause decides who settles any argument.
Meridian’s retail operations, clinics and contracting businesses all carry working capital in different shapes — inventory on a shelf, receivables waiting on payers, retention held back on jobs in progress. None of it is static, and all of it changes between the day a price is agreed and the day the deal closes.
That movement is what the adjustment mechanism exists to handle. Without it, a seller could collect every receivable and run down inventory before closing and still receive the full price, delivering a business the buyer has to immediately refinance.
What follows is how the mechanism is built and where it tends to break, with the dispute clause treated as a live provision rather than boilerplate.
The target level of current assets less current liabilities that the parties agree a normally operating business should carry at closing. Delivering above the peg increases the price; delivering below it reduces the price. The peg is a negotiated figure, not an accounting output.
The parties shake hands on a number, then discover months later that each priced it on a different assumption about what the business would arrive with. One side expected the receivables, the other expected to collect them first, and the agreement’s definitions are silent enough to support both readings.
The peg is agreed from real historical data with seasonality accounted for, and the accounting principles behind the calculation are written down specifically enough that the same ledger produces one answer rather than two.
The closing statement is prepared on a stated basis, reviewed within a stated window, and any remaining disagreement is decided by an independent accountant on defined terms. The adjustment becomes an arithmetic exercise rather than a renegotiation.
A buyer prices a business on the assumption that it can operate from day one without injecting money to pay suppliers or cover payroll. The peg is the written version of that assumption.
Set it too high and the seller effectively funds the buyer’s opening position. Set it too low and the buyer acquires a business that needs cash immediately. Either way the error is the same size as the gap, so the number deserves more attention than its single line in the agreement suggests.
The peg is also where the structure of the deal shows up. A business delivered free of debt and cash has its working capital measured on a different basis than one where the buyer is assuming financing, and the definition has to match the deal actually being done.
The usual method is a trailing average over enough months to smooth normal fluctuation, drawn from the target’s own balance sheets. Twelve months captures a full cycle; shorter periods are quicker and more easily skewed.
Seasonality is the most common distortion, and Meridian has plenty of it. A contractor’s receivables peak during the building season and drain over winter. A retailer builds inventory ahead of its strongest quarter. Choosing a measurement window without accounting for that hands an advantage to whichever side suggested the window.
Nobody knows the exact position on the closing date, so the agreement works in two stages. The seller delivers an estimate shortly before closing and the initial payment is calculated against it. After closing, the buyer prepares an actual calculation and the difference is paid one way or the other.
The mechanics of that second stage are where sellers lose money quietly, because the party preparing the calculation now controls the business and all of its records.
The seller needs a period long enough to examine the calculation properly, and a provision stating that the statement becomes final if not objected to within it. A short window with no access rights makes the review theoretical.
An express right to the working papers, ledgers and supporting detail behind the calculation, together with reasonable access to the people who prepared it. Without that language the seller is objecting to a number it cannot examine.
Agreements commonly limit objections to whether the calculation followed the stated principles, rather than reopening the principles themselves. That is sensible, provided the principles were defined with enough precision at the outset.
The standard answer is an independent accountant, appointed by agreement or by a stated fallback, acting as an expert rather than an arbitrator and deciding only the items still in dispute. Their determination binds both parties.
The provisions that matter are the unglamorous ones: how the accountant is chosen if the parties cannot agree, whether they may pick a figure outside the range the parties have proposed, how their fees are allocated, and how long they have to decide.
A clause that leaves appointment to mutual agreement with no fallback is a clause that stops working the moment relations sour, which is precisely when it is invoked.
An agreement governed by Idaho law and performed in Ada County will have its remaining disputes resolved under Idaho contract principles, which read the parties’ own definitions as the controlling terms. The agreement’s words do the work, so vague drafting produces an uncertain outcome regardless of which side was commercially right.
That is the practical argument for the expert determination route. An accountant deciding defined items on stated principles reaches an answer in weeks. Anything that leaves the agreement’s own machinery takes considerably longer and costs more than the adjustment usually is.
The drafting is a few pages and the negotiation is mostly definitional, but it is detailed work and it benefits from being done alongside the accountants rather than after them. The peg is a commercial number; the definition that supports it is a legal document.
Where a client is already in a true-up dispute, the work is narrower: reading the definitions against the calculation, identifying which objections fall inside the permitted scope, and running the agreement’s own appointment mechanism before the review window closes.
Clark Meyers PC drafts and negotiates purchase price adjustment provisions for Meridian buyers and sellers, and works with the client’s accountants on how the peg is built.
| Provision | Drafted well | Drafted loosely |
|---|---|---|
| The peg | Trailing average across a full cycle, adjusted for seasonality | A single month’s balance sheet chosen by whoever suggested it |
| Accounting principles | Named, with a stated hierarchy where principles and past practice differ | Referenced generally, so the same ledger supports two different figures |
| Review rights | A defined window plus express access to working papers and people | A short window with no access, making the review theoretical |
| Dispute mechanism | Independent accountant, fallback appointment, defined scope and fee allocation | Appointment by mutual agreement, with no fallback when agreement fails |
Is the price you agreed the price you’ll actually receive?
Book Your Free Legal-Strategy CallThe bottom line
The peg, the accounting principles and the dispute mechanism are the three provisions that decide whether the headline price survives contact with the closing balance sheet. Define them precisely while both sides are still cooperating, because a loosely drafted adjustment clause is argued about at exactly the moment nobody wants to cooperate.
The peg is a negotiated target level of current assets less current liabilities that the parties agree represents normal operation, against which the actual position at closing is measured to adjust the price.
Without an adjustment a seller could collect receivables and run down inventory before closing while still receiving the full price, leaving the buyer to fund the business’s opening position out of its own pocket.
The common approach is a trailing average drawn from the target’s balance sheets over a period long enough to cover a full operating cycle, then adjusted for known seasonal peaks and troughs.
Seasonal businesses carry very different working capital at different points in the year, so a measurement window chosen without adjustment hands an advantage to whichever party proposed that particular window.
The closing estimate is the seller’s forecast of the position shortly before completion and sets the initial payment, while the true-up is the buyer’s actual calculation afterwards that corrects any difference.
Sellers need a defined objection window together with express access to the working papers, ledgers and personnel behind the buyer’s calculation, since reviewing a figure without the supporting detail achieves nothing.
Adjustment disputes are commonly referred to an independent accountant acting as an expert on the items still in dispute, with a determination that binds both parties and typically arrives within weeks.
Working capital can be calculated several defensible ways, so an agreement that does not name the principles and set a hierarchy where they conflict with past practice invites two reasonable people to reach different figures.
Adjustments run in both directions, increasing the price where the business is delivered above the peg and reducing it where delivered below, which is why both sides have an interest in the number being right.
Clark Meyers PC negotiates adjustment provisions for Meridian buyers and sellers from the firm’s only Idaho office, at 4865 E. Franklin Rd in Nampa, elsewhere in the Treasure Valley. No Meridian office is maintained.
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