SPRING 2019

134 THE DISTRIBUTOR’S

134 THE DISTRIBUTOR’S LINK ROMAN BASI WORKING CAPITAL – WHAT IS IT AND WHY IS IT IMPORTANT? from page 62 A Working Capital section of a stock or asset purchase agreement will typically have language similar to the following, “At the Closing, the Purchase Price shall be subject to adjustment in accordance with paragraph (b) below, based on an amount (the “Estimated Closing Net Working Capital”) equal to the Companies’ good faith calculation of the estimated Net Working Capital of the Business as of the Closing Date (the “Calculation Date”).” This statement will likely be followed by another which says, “If the Estimated Closing Net Working Capital is less than $[•] (“Net Working Capital Target”), the Purchase Price payable at the Closing shall be reduced by an amount equal to such deficiency (such deficiency to reduce the Initial Cash Purchase Payment payable to the Companies at Closing).” The purpose of these clauses in asset purchase agreements is to ensure the buyer and seller are both getting their due pricing. Imagine buying a company, which initially shows solid working capital, but upon looking at the averages over time it shows a steep decline. This may indicate you are buying a company which is hemorrhaging money, or being run incorrectly. By requiring an adjustment of the purchase price based upon average working capital can ensure both parties are protected in the transaction. To sum up, working capital is a key component to analyzing the efficiency of a company. A company with positive is typically in good shape for expansion or at least maintaining the current course; however, it is important to remember that some businesses operate with a negative working capital just from their nature of business (think inventory based). Knowing how working capital effects the business you’re evaluating can help determine the viability of the business. While the basic formula for working capital is simple, actually applying it to the company can be difficult. ROMAN BASI ANTHONY Di MAIO RADIAL GROOVERS ON MANDRELS from page 70 This work hardness must be removed and the process used to remove this work hardness is annealing. The manufacturing process creates work hardness. The molecules in the metal are all tight and rigid and annealing relaxes the molecules and permits the rivet body to expand when setting the blind rivet without cracking the rivet body. An annealed rivet body will set well when the mandrel is pilled and will give you a secure riveted joint. Pulling jaws will cause metal particles to chip off the surface of the mandrel and become lodged in the teeth of the pulling jaws. These metal particles will prevent the teeth of the pulling jaws from penetrating the surface of the mandrel. When this occurs, the pulling jaws will slip on the mandrel surface and not grip the mandrel, even if the mandrel has radial grooves and will not set the blind rivet. These conditions will also make the pulling jaws partially slip causing the need to stroke the setting tool 2 or 3 times to set the blind rivet. Structural blind rivets require a very high mandrel tensile strength to set the structural blind rivet. When setting a structural blind rivet (Monobolt or Magna-Lok) the long head of the mandrel must be pulled into the rivet body, expanding the rivet body. The friction that is generated when the long mandrel head is being pulled into and expanding the rivet body is very high. This friction is so high that a lubricant must be applied to the rivet body and mandrel during the manufacturing process. If this lubricant is not applied the mandrel will break before the structural blind rivet is set. This is called a pre-mature mandrel break. Pulling jaws periodic maintenance such as cleaning and lubrication is still necessary when setting blind rivets with or without radial grooves. Pulling jaws grip the surface of the mandrel by the pressure of the spring loaded jaws pusher, the sharpness of the pulling jaw’s teeth and the radial grooves on the surface of the mandrel. The most important of these functions is how well the pulling jaws perform the initial grip. If there is no initial grip of the pulling jaws, the jaws will slip and the setting tool will not et the blind rivet. I hope I have explained clearly the need and reason radial grooves or serrations are used with some blind rivets. ANTHONY Di MAIO