An alternative to traditional completion accounts & purchase price adjustments
Doing deals can be an exciting and rewarding process for all parties involved, but in most cases, they require an incredible amount of time, analysis and negotiation to get to the finish line. One of the most contentious issues that continues to plague deals is around working capital – specifically the purchase price adjustments that result from setting working capital targets. If consensus cannot be easily reached, working capital discussions can prolong negotiations, leading to deal fatigue, increased costs and a risk of losing the deal.
To address some of the pain points associated with traditional completion accounts, the use of a Locked Box Mechanism is becoming increasingly prominent, as it can help lead to greater deal transparency, better decisions, and smoother negotiations.