Locked box vs completion accounts
Two transaction-price mechanisms: a locked box uses an agreed historical balance sheet with leakage protections, while completion accounts adjust consideration using specified closing-date measures such as cash, debt and working capital.
Locked box vs completion accounts in round numbers
Hypothetical: the locked-box reference date is 31 December and closing occurs three months later. The agreement sets economic allocation, permitted leakage and any value-accrual payment. Under a completion-accounts approach, agreed closing-date measures are finalized through the contractual true-up process. Three elapsed months alone does not calculate a price.
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| Issue | Locked box | Completion accounts |
|---|---|---|
| Reference basis | Agreed historical balance sheet | Agreed closing-date measures |
| Interim value | Economic allocation and any accrual payment per terms | Effect determined by the price formula |
| Later claims or adjustments | No routine completion-account true-up; leakage or other claims may remain | Specified post-close true-up and other agreed claims |
Terms Related to Locked box vs completion accounts
Working capital peg · SPA / definitive agreement · Due diligence · Sources & Uses · All of the glossary