True-up

Definition

A post-closing payment squaring what was promised with what was delivered.

Why It Matters

It lands months after close, on numbers nobody is watching by then, and it moves real money in whichever direction the arithmetic points. Agree the accounting method in the purchase agreement itself, down to how receivables over ninety days are valued and whether inventory is counted at cost. A method left open is a dispute scheduled for a date when both lawyers have moved on. Put a deadline and a tie-breaker in as well, or the settlement simply never happens.

In numbers: A deal closes on an estimated $250k of working capital; when the final balance sheet lands 60 days later showing $230k actually delivered, the true-up bills the seller back the $20k shortfall, or the buyer if it came in high.