A working capital adjustment is a change to the final sale price that accounts for the difference between the business's working capital, cash, receivables and inventory minus short-term liabilities, at closing versus an agreed target level. If working capital comes in below target, the price is reduced; if it comes in above, the seller is typically paid more.
Why it matters
This adjustment can move the final check up or down after closing, based on numbers settled after the deal is signed.