Completion Accounts vs Locked Box: What’s the Difference and Which Is Right for Your Deal?

When selling a business, it is not just about the price, it is about how that price is calculated, protected, and finalised.

Two common pricing mechanisms in UK business sales are completion accounts and the locked box. Both aim to ensure fairness in the deal, but they work in very different ways.

Choosing the right structure early in the process can affect cashflow, timing, and risk. This article explains how each mechanism works, what makes them different, and how to choose between them.

What Are Completion Accounts?

The completion accounts method finalises the price after the deal completes.

Typically, the buyer and seller agree a base price that is then adjusted based on actual figures from the balance sheet on completion day. The key areas for adjustment are:

• Net debt

• Working capital

• Occasionally other agreed items

If the business has more cash or working capital than expected, the price increases. If it has less, the price decreases.

Advantages of completion accounts:

• Reflects the actual financial position at completion

• Useful for seasonal or fluctuating businesses

Disadvantages of completion accounts:

• Can cause delay and disputes

• Adds post-completion complexity

• Requires extra work to produce and agree the accounts

What Is a Locked Box Mechanism?

A locked box mechanism sets the purchase price using a historic balance sheet, usually a recent set of management accounts, referred to as the locked box date.

From that date onwards, the seller must not extract value from the business. The price is fixed, and any cash profits generated after the locked box date belong to the seller. This is sometimes compensated through a daily "ticker" — a fixed rate applied to the locked box price.

There are no post-completion adjustments. The price is agreed up front and paid at completion.

Advantages of a locked box:

• Price certainty

• Simpler post-completion process

• Favoured in private equity–backed deals

Disadvantages of a locked box:

• Relies heavily on the accuracy of the accounts

• Buyer takes on more risk

• Needs strong protections against value leakage

Completion Accounts vs Locked Box: Key Differences

Feature	Completion Accounts	Locked Box
Price finalisation	After completion	At signing, based on historic accounts
Risk	Shared, adjusted post-deal	More risk sits with buyer
Simplicity	More complex	Cleaner and faster to close
Common in	Trade sales	Private equity sales

Which Should You Choose?

There is no one right answer. It depends on:

• The stability of the business’ financials

• The availability and reliability of recent accounts

• The buyer’s expectations and risk appetite

• Whether the seller wants a clean break or is open to post-deal engagement

Use completion accounts if:

• The business is seasonal or volatile

• There is uncertainty around recent performance

• You want the price to reflect the handover-day balance sheet

Use a locked box if:

• You want a clean exit with no post-deal adjustment

• Your accounts are robust and reliable

• You want to agree everything up front and avoid further negotiation

Final Thought

Completion accounts vs locked box is a key choice. The pricing mechanism you choose can affect timing, trust, and the final amount received. It should be discussed early and captured clearly in the Heads of Terms.

If you are unsure which option works best for your business, we can help. Deal Clarity offers fixed-fee support to review offers, explain completion mechanisms, and protect your value from day one.