What is a locked-box closing mechanism?
A locked-box closing mechanism means that the purchase price is determined based on a historical balance sheet date (the locked-box date). From that date onwards, the company’s results accrue to the buyer. Between the locked-box date and closing, no value may flow to the seller (no leakage), except for pre-agreed permitted leakage. This mechanism creates clarity regarding the purchase price and prevents discussions about adjustments after closing.
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