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Hope the below is helpful:

Lockbox:

  • key principle is that effective date (economic ownership buyer) is before closing date (legal ownership buyer) and the purchase price is determined based on financial statements as of the effective date.
  • The seller provides an indemnity such that business will be run as usual between effective and closing date, such that there will be no leakage of value during the lockbox period.
  • The seller receives interest compensation for deferred payment of the purchase price over the lockbox period (i.e. between effective date and closing date).
  • Note that typical price adjustments for cash, debt, working capital are agreed prior to signing on the effective date

Completion accounts:

  • The effective date = closing date. Purchase price is determined at closing. 
  • Definitions of cash, debt, working capital are agreed upon prior to signing and are based on the closing account prepared post  completion.
  • The concept of leakage is thus irrelevant. The SPA (share purchase agreement) is however likely to contain "conduct of business" provisions up to the closing date. 
  • Note that the process for preparing, reviewing and agreeing to the final completion accounts is set out in the SPA or APA (Asset Purchasing Agreement). Effective date coincides with the closing date, thus legal and economic ownership transfer at the same moment in time to the buyer.
 

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