A seller that grants exclusivity on a letter of intent stops its auction before the price is final. When the purchase agreement will move the price dollar for dollar against a working capital peg, the peg is part of what remains open, and in private-company sales that adjustment is now the usual structure. SRS Acquiom’s 2026 study covers more than 1,500 private-target acquisitions, most of them not publicly reported, and its landing page puts working capital adjustments in more than 90% of private-target transactions, against 50% a decade ago. The page does not say how the deals were chosen or how many adjustments run both ways without a threshold, and the study itself is gated, so I read the figure as describing that sample rather than every private sale.
Take an illustrative pair of letters for a business whose working capital has run near $9 million. Bidder A offers $62 million and leaves the peg to be agreed after diligence. Bidder B offers $60 million against a $9 million peg. Assume both deals are cash-free and debt-free, define working capital the same way, adjust in both directions without a collar, and close on the same day. Whatever working capital the seller delivers at closing then moves both prices by the same amount and drops out of the comparison. What remains is headline minus peg: $51 million for B, and for A, $62 million minus a number A has not given. A is the better bid only if its peg settles below $11 million.
That $11 million is the number the seller should carry through the rest of the process. Below it, choosing A was right. Above it, the seller would have done better with B, and it finds out which only after B has been asked to wait. A’s diligence will produce its own view of normal working capital, and some arguments for a higher figure may be fair, such as collections the seller pulled forward with customer discounts or suppliers it has been paying late. Each of those is an argument about price, made while A is the only bidder still negotiating.
The first request is the peg itself, or a method that produces one from the working capital schedule in the data room, with the adjustments A expects to test listed in the letter. Some buyers will not commit to either before their quality-of-earnings work. For them, the seller can tie exclusivity to the peg instead: the exclusivity clause, which the parties can make binding even when the price terms are not, ends if A proposes a peg above a stated ceiling. A ceiling at $11 million would tell A almost exactly what B’s letter is worth and invite a peg just under it, so I would set it lower, at a level the seller’s own schedule supports, and accept that A will infer something from it.
The objection is that a ceiling is a peg by another name, fixed before the buyer has seen the numbers. It is less than that. A can still propose any peg it can support, and the seller can still accept one above the ceiling if B has gone away or the argument is good. What the ceiling changes is who bears the cost of a high peg during exclusivity. It also has limits a board should hear plainly. It covers only the peg, so a buyer can still seek a lower price through debt-like items or the headline. And it is worth only as much as B’s willingness to wait, which is a reason to keep the exclusivity period short.
In the board materials I would put headline minus peg beside each headline, which gives $51 million for B and, for A, $62 million less a peg still to be named, with the $11 million breakeven and the ceiling written next to it. A board that approves exclusivity on those terms has decided in advance the peg at which it would reopen the auction, a decision an open peg otherwise postpones until B is gone.