Locked Box vs Completion Accounts in a Share Deal (2026)

Locked box vs completion accounts: the short answer When you buy a company by buying its shares, you agree a price before the deal completes. But the business keeps trading between agreement and completion, so its value moves. The two main ways to deal with that gap are the locked box and completion accounts. - With a locked box, the price is fixed in advance by reference to a recent balance sheet, and it does not change after completion. The economic risk and reward of the business pass to the buyer from that earlier "locked box date".

• With completion accounts, a provisional price is paid at completion and then trued up afterward against accounts prepared as at the completion date, so the final price can go up or down. Neither is better in the abstract. A locked box gives certainty and speed; completion accounts give precision. Which one fits depends on the deal and on whether you are the buyer or the seller. This article is general guidance, not legal advice or financial advice. Deal structures and tax effects vary, so take professional advice before agreeing a pricing mechanism. ## How the locked box works A locked box fixes the price using a set of recent accounts, usually audited, as at an agreed date before signing (the locked box date). From that date, the business is treated as running for the buyer's account, even though the buyer does not legally own it yet. Because the seller still runs the business up to completion, the buyer protects the fixed value with a leakage regime: - Leakage is value flowing out of the company to the seller or its connected parties between the locked box date and completion, for example dividends, unusual bonuses, or payments to the seller's group. The seller gives an indemnity to pay back any leakage, often on a pound-for-pound or rupee-for-rupee basis.
• Permitted leakage is a list of payments agreed in advance as acceptable, such as ordinary-course salaries and agreed intra-group charges.
• The seller may ask for an equity ticker, a daily amount added to the price to compensate it for the profit the business earns for the buyer's benefit after the locked box date. The buyer gets comfort by doing thorough due diligence on the locked box accounts, since there is no later true-up to correct a mistake. As a rule of thumb, those accounts are usually no more than about six months old, because the longer the gap, the more the business can change and value can leak. ## How completion accounts work With completion accounts, the parties agree an estimated price at signing and pay it at completion. Then, within a set period after completion, one party (usually the buyer) prepares accounts as at the completion date to measure the actual position, typically net debt and working capital against agreed targets. The price is then adjusted: - If actual net debt is higher or working capital is lower than the targets, the price goes down and the seller refunds the difference.
• If the position is better than the targets, the price goes up and the buyer pays more. The other party can review and dispute the accounts, and the mechanism usually includes an expert-determination route for disagreements. The result is a price that reflects the true position at completion, at the cost of extra time, expense and the risk of a dispute. ## Side by side | Feature | Locked box | Completion accounts | |---|---|---| | When price is fixed | Before signing, at the locked box date | After completion, once accounts are prepared | | Post-completion adjustment | None (price is fixed) | Yes, up or down | | Economic risk passes to buyer from | Locked box date | Completion | | Main buyer protection | Leakage indemnity plus due diligence | The true-up calculation itself | | Certainty of price | High | Lower until trued up | | Speed and cost | Faster, cheaper | Slower, more expensive | | Dispute risk | Lower | Higher (over the accounts) | | Main negotiation | Defining leakage and permitted leakage | Defining targets and accounting policies | ## Which should a buyer or seller prefer? Sellers often prefer a locked box. It gives a clean, fixed price with no clawback, a faster exit, and it rewards the seller for value built after the locked box date through the equity ticker. It works best when the accounts are recent and reliable. Buyers are split. A buyer that has done deep diligence and wants certainty and speed, such as in a competitive auction, may accept a locked box. A buyer that is worried about the quality of the accounts, or about what happens to net debt and working capital before completion, may prefer completion accounts so the final price reflects reality. Private-equity sellers and auction processes have made the locked box very common in many markets. ## Does this vary by jurisdiction? The mechanisms themselves are jurisdiction-neutral and are used in share deals across the UK, Europe, India, Singapore, Australia and beyond. What varies is the tax and accounting backdrop. The accounting policies behind completion accounts follow local standards, and the tax treatment of the price, the equity ticker and any leakage differs by country, as do stamp duty and filing requirements on a share transfer. So the choice of mechanism is global, but the detailed drafting and the tax analysis are local and should be checked with advisers in the relevant jurisdiction. ## Where a contract workspace helps Both mechanisms live inside a share purchase agreement, and the risk sits in the detail: how leakage and permitted leakage are defined, how net debt and working capital targets are set, which accounting policies apply, and the deadlines for preparing and disputing completion accounts. Keeping those definitions consistent and tracking the post-completion timetable is contract work that can sit in one AI workspace tuned to how your company does deals, with per-clause risk flags, plain-language edits and key dates in a single view. Adira is one tool that approaches share deals this way. This explainer on its own is enough to choose between a locked box and completion accounts.