Excess cash (or surplus cash, trésorerie excédentaire) is the portion of a company's cash and cash equivalents that exceeds the minimum amount required for normal operating purposes — the "normalized" operating cash level. In an enterprise value to equity value bridge, excess cash is added to the enterprise value as a non-operating asset, increasing the equity value (and hence the price paid by the acquirer). Conversely, a cash deficit (or normalised working capital shortfall) reduces the equity value.

Determining the normalized operating cash level is a judgmental exercise: it typically equals 5–15 days of revenue (or 2–4% of annual turnover) for most businesses, reflecting the minimum liquidity buffer needed to manage day-to-day payments. Cash above this threshold is considered surplus and is returned to the seller as value in the bridge. In practice, disputes over the normalized cash level are common in completion accounts adjustments and are one of the most frequently litigated items in post-closing purchase price disputes.

In a financial due diligence, excess cash must be distinguished from restricted cash (collateral, escrow accounts, cash not freely available), cash in tax-opaque entities where repatriation would trigger withholding tax, and cash "trapped" in operating cycles with high seasonal variability. Each of these categories requires specific analysis before being classified as surplus in the equity bridge.

At Hectelion, we determine and document the normalized cash level in our due diligences and structure the cash bridge in our M&A advisory mandates.