Working Capital in Agency Deals: The Hidden Value Lever Most Founders Miss

If you're preparing to sell your agency, you’re probably (rightly) focused on buyer fit, EBITDA multiples, and earn-outs.

But there’s another number that can quietly swing hundreds of thousands in or out of your deal:

Net Working Capital (NWC).

And here’s the twist: in almost every agency deal we come across, the NWC peg is misunderstood, miscalculated, or left unchallenged - by buyers, sellers, and sometimes even their accountants.

So what is Net Working Capital?

At its simplest:

NWC = Current Operating Assets – Current Operating Liabilities

Emphasis on the CURRENT bit…That includes:

It typically excludes:

Net Working Capital reflects the financial “float” needed to keep the business operating post-close — no more, no less.

Interestingly, proportionally higher liabilities (like deferred revenue or payables) aren’t necessarily bad — they can mean others (clients, suppliers, tax authorities) are funding your operations.

Why it matters in a deal

Most deals are structured on a cash-free, debt-free, normalised working capital basis. That means:

If your actual NWC within your closing set of numbers is above that peg, you get paid the difference. If it’s below, the buyer reduces the price.

Why agencies are different — and often lose money quietly

Traditional NWC logic often comes from inventory-heavy industries like retail or manufacturing.

But agencies are different:

In short: many agencies can run on very little - or even negative - working capital.

Yet many buyers still seek an uiltra-conservative peg - sometimes based on three months’ operating costs (actually an erroneous concept).  This overstates what’s actually needed and leaves real money behind unnecessarily.

What to do:

Final thought:

If you’re heading into a deal, don’t let working capital become an afterthought. A strong peg position — grounded in how your agency really works — can mean six figures more in your pocket.

Because in the end, it’s not just what your agency is worth…It’s what you keep.

Disclaimer: This is general guidance only. Make sure you get proper financial and legal advice when modelling Net Working Capital to your specific situation, but I hope this sparks some thoughts. And we’re always here to help…