deal-structures
Completion accounts are a closing-date (or completion-date) balance sheet used to true-up cash, debt and working capital against targets in the SPA. The equity price moves after closing when the accounts are agreed.
Under a completion-accounts deal, the parties agree a headline enterprise value and target levels for cash, net debt and working capital. After closing, the buyer (usually) prepares a completion statement. The seller comments. If they cannot agree, an independent accountant determines the numbers. Cash then moves again.
This is the traditional UK and many U.S. middle-market pattern. It contrasts with locked box, where the arithmetic is frozen at a historical date.
The SPA should specify: GAAP/IFRS as applied in the last accounts, specific policies (revenue cut-off, inventory provisioning), and a hierarchy if those conflict. “Consistent with past practice” versus “compliance with IFRS” is a real fight when past practice was aggressive.
Target WC €2.00m. Completion WC €1.72m. Target net debt €0. Target net debt actual €0.35m. Seller expected €12.00m equity cheque; after true-up they receive €11.37m. The expert is appointed because the parties disagree whether a customer credit note issued five days after closing relates to pre-closing revenue.
Buyers like the fairness of paying for the company they actually got. Sellers dislike delayed proceeds, the buyer’s information advantage after close, and the cost of the expert. That is why European PE sell-sides often refuse completion accounts.
No timetable. No materiality. Buyer-prepared accounts with no seller access to the ERP. Mixing completion accounts with a locked-box leakage regime.
Completion accounts will not capture a customer who leaves in month two. They also invite gamesmanship at the period end (stuffing or starving WC).
A true-up is only as clean as the ledger. Structured financials, with the same policies the QoE used, turn completion accounts into a check rather than a second negotiation.