Lock Box Purchase Agreement

The balance sheet of the effective date must accurately reflect the resulting configuration and working capital and the resulting entity`s debts, in the form in which they are delivered to the purchaser. The main difference for a closed boxing transaction, unlike a transaction using a closing price adjustment mechanism, is that the balance sheet on which the value of equity is based is available before signing. However, the value of equity still needs to be calculated in the same way as in the case of an agreement with a “traditional” adjustment of debt and working capital closing prices. Discussions and agreement on the impact of debt and debt on the price, as well as the level of working capital at the time of entry into force, will still have to be eliminated from the “normal” level required by the industry. In particular, buyers should also be aware that the amount of intercompany balance they must pay at closing is reasonable – either by obligation not to change these amounts (particularly intragroup loans or financial balances) after the entry into force, or by strict restrictions on the nature and volume of transactions between the business for sale and the seller. In addition, the buyer then invoices the remaining intercompany balances with the seller at closing (just as he inherits the obligation to settle all other debts of the company at closing). In the case of a traditional adjustment of the final balance sheet, the purchase price is paid as an estimate at the close. After closing, the purchase price is adjusted based on the difference between the amount used to determine the estimated purchase price (or other reference number) and the actual number calculated from a final balance sheet established on the reference date, after final report. Given the improvement in the buyer`s risk profile, larger guarantees may also be requested for the period from the reference date to the completion of the blocked box, possibly covering the amount of net assets, the amount of working capital and/or debt, the consistency of supplier collection and payment funds, as well as all problematic areas that would otherwise have been covered by the closing accounts ( for example). B sloths or stock valuations).

Sellers tend to resist these guarantees as dilusants of the fixed price concept behind a closed box, so that a buyer will have a harder time ensuring this protection in a competitive situation.