What are the differences between a Locked Box and Completion Accounts approach in M&A transactions?

The deal flow in the M&A market continues to remain strong, so we thought that it would be relevant to look at the different ways in which price certainty can be achieved, specifically when considering the Locked Box and Completion Account options.

We have seen parties give consideration to completing transactions under a Locked Box process rather than using the traditional Completion Account adjustment mechanism.

Alternatives for achieving price certainty in M&A transactions

The traditional Completion Account adjustment mechanism involves an adjustment to the purchase price following completion. The adjustment is based on the accounts at the Completion Date and is prepared based upon principles that have been negotiated between the parties (which are usually set out in the sale agreement).