Completion Accounts
Financial statements prepared at completion to calculate final adjustments to the purchase price.
Full Definition
Completion accounts are financial statements prepared as at the completion date to determine the final purchase price. They typically measure:
- Net assets or net debt position
- Working capital levels
- Cash and debt balances
How completion accounts work: 1. Draft accounts prepared by one party (usually buyer) within a set period post-completion 2. Other party reviews and may dispute items 3. Disputed items referred to an independent accountant if not resolved 4. Final purchase price adjusted based on agreed accounts
Common adjustment mechanisms:
- Locked box: Price fixed at a historical date, no completion accounts needed
- Completion accounts: Price adjusted based on actual position at completion
- Hybrid approaches
UK practice considerations:
- Independent accountant decisions are typically final and binding
- Detailed completion accounts provisions needed in the SPA
- Working capital targets and mechanisms must be clearly defined
- Accounting policies should be agreed in advance
The completion accounts process can take 60-90 days post-completion and may involve significant negotiation.
Related Terms
Locked Box
A pricing mechanism where the purchase price is fixed at a historical date with no completion accounts adjustment.
Working Capital
The operating liquidity of a business, typically calculated as current assets minus current liabilities.
Net Debt
Total debt minus cash, representing the net financial obligations that reduce a company's equity value.
Purchase Price
The total consideration paid by the buyer to acquire the target business or its shares.