deal-structures
A purchase price adjustment is the contractual machinery that turns a headline enterprise value into the cash the seller actually receives, using net debt, working capital, locked box or completion accounts.
Most private deals are struck on enterprise value. The equity cheque is EV minus net debt plus/minus a working capital adjustment, with countless local variants. The purchase price adjustment is the set of definitions that make that arithmetic contractual.
Two families dominate. Locked box: economic benefit transfers at a historical accounts date; leakage is the adjustment. Completion accounts: the parties true-up cash, debt and WC to a closing balance sheet. Earnouts are sometimes grouped with “adjustments” in conversation; they are economically different (future performance, not a closing balance sheet).
Is deferred revenue debt-like? Is a customer prepayment cash that the buyer must leave in? Is an operating lease now on-balance-sheet debt? The QoE and FDD schedules should match the SPA definitions. If they do not, you have two prices.
Agreed EV €40m. Net debt €6m. Target WC €4.5m, actual WC €4.1m. Equity value = 40 − 6 − 0.4 = €33.6m. A single “debt-like item” of €1.2m that the seller thought was ordinary WC would have been a 3% swing. That is the adjustment conversation.
Buyers like completion accounts because they get the company they actually close on. Sellers like locked box because they get certainty and keep profits after the box date (subject to leakage). Private equity processes in Europe often insist on locked box for that certainty.
Copying a U.S. cash-free/debt-free SPA onto a European locked-box auction. No expert-determination clause. Accounting policies that do not match historical practice.
No mechanism saves you from a bad multiple. Adjustments also cannot capture commercial deterioration that is not yet in the accounts — that is MAC or walk rights, if you have them.
Price adjustment is a data problem: a single, dated financial position both sides can see. That is why Dazur treats structured financials as the start of negotiation, not an appendix to the SPA.