Completion Accounts vs Locked Box Mechanism

00:00 Introducing completion accounts vs locked box mechanism
00:40 What are completion accounts?
02:30 Caps and collars and de minimis provisions
03:00 Completion accounts: the seller’s perspective
03:21 Completion accounts: mechanism definition
05:05 Completion accounts: Debt free, cash free transactions
05:40 Working capital and net-debt positions
06:35 Importance of internal/external corporate finance
07:00 Business cycles and seasonal cycles
08:40 Increasing usage of locked box over completion accounts
09:20 What is the essence of a locked box mechanism?
10:15 Locked box mechanism: for sellers who want certainty
10:45 Equity value
11:00 Normalised working capital
11:10 Leakage and permitted leakage
12:50 Equity price at locked-box date and equity tickers
13:31 Completion accounts vs locked boxed and satisfying debts
14:48 Decisions before Heads of Terms
In the fourth of our five-video "M&A Deconstructed" series, focused on demystifying mergers and acquisitions and their many component parts, Partner and M&A Solicitor at Steele Raymond Nick Davies, and Managing Director of TheNonExec Limited and M&A expert Justin Levine, discuss Completion Accounts vs Locked Box Mechanisms.
Completion accounts and locked box mechanisms are essentially variations of completion mechanisms used in mergers and acquisitions to determine the final acquisition price that a buyer will pay. There are clear distinctions, advantages and disadvantages between these two widely accepted methods of M&A completion and in this video Nick and Justin attempt to shed light on these whilst sharing their own professional opinions and advice for both buyers and sellers.
On this very interesting and important topic, Nick and Justin cover the following and more:
▶ What are completion accounts?
▶ What is a locked box mechanism?
▶ The pros and cons of completion accounts vs locked box mechanisms
▶ Why locked box mechanisms are becoming increasingly popular
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