Purchase Price Adjustment” is commonly included in M&A transactions and usually refers to the cumulative effect of various additions and deductions, which (i) must be taken into account when arriving at a final purchase price for a particular transaction and (ii) are calculated as of the Closing of the transaction (e.g., by adding cash, certain other Assets and any positive Working Capital, and by deducting certain Debt, advisory fees, other transaction expenses and any shortfall in Working Capital).

It often is necessary for the parties to use estimates at the Closing for some of the components of the Purchase Price Adjustment; and it then is customary to include a Post-Closing True Up as another element of the Purchase Price Adjustment, which occurs after the Closing and usually is led by the Buyer after it has assumed control of the Seller’s financial matters.