Home » Resources » Case Study: Recovering $43.2M Following a Carve-Out Acquisition
October 18, 2026
Following a carve-out acquisition, a technology company faced a significant working capital dispute. The working capital conveyed to the buyer was approximately $70 million below the threshold established in the purchase agreement. To support its position in settlement discussions and potential litigation, the company needed to substantiate the value of the assets received and develop defensible documentation for the disputed balances.
The company needed to establish a defensible valuation of acquired working capital and address a substantial shortfall under the purchase agreement.
The acquisition involved a technology company with approximately 800 employees and $300 million in annual revenue. Following the transaction, the buyer identified a significant difference between the working capital conveyed and the threshold specified in the purchase agreement.
Resolving the dispute required a detailed understanding of the opening balance sheet and the underlying value of individual assets. Certain working capital balances involved subjective estimates, including accruals, reserves and other valuation assumptions that required supporting evidence.
The company also needed to prepare documentation that could support its position during settlement discussions and, if necessary, potential litigation.
Smith + Howard developed an asset-level analysis of acquired working capital and assembled the documentation needed to support settlement discussions.
The team accumulated opening balance sheet working capital balances on an asset-by-asset basis, creating a detailed foundation for evaluating the assets conveyed in the acquisition.
Particular attention was given to inventory. Smith + Howard established a process to track both the consumption and forecasted consumption of inventories transferred as part of the transaction, providing additional support for assessing their value.
The team also developed supporting documentation for subjective working capital values, including accruals, reserves and estimates. Throughout the settlement process, Smith + Howard responded to requests from the mediator and provided analysis to support the company’s position.
The engagement supported a successful resolution of the working capital dispute, resulting in $43.2 million in recovered cash proceeds.
Working capital disputes can have significant financial consequences long after a transaction closes.
When the value of acquired assets is disputed, detailed financial analysis and defensible documentation are critical. By establishing a clear understanding of opening working capital balances, supporting subjective valuations and preparing evidence for settlement discussions, buyers can strengthen their position and pursue recovery of disputed amounts.
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