The working capital peg is the pre-agreed normal level of working capital you are expected to deliver at completion, the benchmark the actual number is measured against.
Technically, it is a target figure for net working capital, usually derived from an average over a defined historical reference period, adjusted for seasonality, one-off items, and balances the buyer will not actually be able to collect.
The buyer wants the peg set high, so any shortfall against it triggers a refund from the seller. The seller wants it set at a level that genuinely reflects how the business normally operates, not an artificially inflated benchmark dressed up as historical accuracy.
Setting the peg is a negotiation, not an accounting exercise, whatever it is presented as. The reference period chosen, the treatment of slow-moving stock, and the definition of which debtor balances actually count can each move the number meaningfully without anyone touching the headline price.
What you as a seller should push back on: a reference period cherry-picked from an unusually strong trading window, debtor and stock definitions that assume perfect collectability, and any peg-setting process that happens after signing rather than being locked into the agreement itself.