{"id":74789,"date":"2026-03-15T13:06:00","date_gmt":"2026-03-15T12:06:00","guid":{"rendered":"https:\/\/zuniclaw.com\/?p=74789"},"modified":"2026-04-17T09:07:54","modified_gmt":"2026-04-17T07:07:54","slug":"the-value-of-a-company-in-ma","status":"publish","type":"post","link":"https:\/\/zuniclaw.com\/en\/the-value-of-a-company-in-ma\/","title":{"rendered":"The Value of a Company in M&amp;A: Locked Box vs. Completion Accounts"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"74789\" class=\"elementor elementor-74789\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-6744a78 e-flex e-con-boxed e-con e-parent\" data-id=\"6744a78\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-cd1ff63 elementor-widget elementor-widget-html\" data-id=\"cd1ff63\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<!-- ============================================================\r\n     ZUNIC LAW \u2013 Locked Box vs. Completion Accounts in M&A\r\n     Elementor HTML widget \u2013 paste entire file content\r\n     Remove this comment before publishing\r\n     ============================================================\r\n     H1 (WP post title): Locked Box vs. Completion Accounts in M&A: How the Purchase Price Is Determined\r\n     Slug: \/en\/locked-box-vs-completion-accounts\/\r\n     Author: Kristina Jevti\u0107, Of Counsel | Zunic Law\r\n     Reviewer: Tijana \u017duni\u0107 Mari\u0107, Advokat | Zunic Law\r\n     Published: April 2026 | Next review: October 2026\r\n     Schema: Article + FAQPage JSON-LD via WPCode\r\n     Canonical: https:\/\/zuniclaw.com\/en\/locked-box-vs-completion-accounts\/\r\n     hreflang SR: \/locked-box-vs-completion-accounts\/\r\n     Internal links: \/en\/company-formation-in-serbia\/ | \/en\/mergers-and-acquisitions-serbia\/ | \/en\/director-liability-serbia\/ | \/en\/solutions\/\r\n     ============================================================\r\n     SEO METADATA [enter in Rank Math, delete before publishing]\r\n     Meta title (58 chars): Locked Box vs. Completion Accounts in M&A \u2013 Zunic Law\r\n     Meta desc (157 chars): Locked box or completion accounts? Learn how each M&A price mechanism works, which one protects buyers or sellers more, and what Serbian practice shows. Zunic Law.\r\n     Focus KW: locked box vs completion accounts\r\n     Secondary KWs: completion accounts mechanism, M&A purchase price Serbia, locked box mechanism M&A, leakage provisions SPA, EBITDA valuation M&A\r\n     ============================================================ -->\r\n<style>\r\n.zl-wrap{font-family:'Poppins',sans-serif;font-size:18px;font-weight:400;line-height:27px;color:rgb(79,94,112);}\r\n.zl-wrap p{margin:0 0 16px 0;font-family:'Poppins',sans-serif;font-size:18px;font-weight:400;line-height:27px;color:rgb(79,94,112);}\r\n.zl-wrap h2{font-family:'Poppins',sans-serif;font-size:32px;font-weight:500;color:rgb(79,94,112);margin:48px 0 40px 0!important;padding-bottom:0;line-height:34px;}\r\n.zl-wrap h3{font-family:'Poppins',sans-serif;font-size:28px;font-weight:500;color:rgb(79,94,112);margin:32px 0 24px 0!important;padding-bottom:0;line-height:38px;}\r\n.zl-wrap a{color:#27BA66;text-decoration:underline;}.zl-wrap a:hover{color:#1e9450;}\r\n.zl-wrap ul,.zl-wrap ol{margin:10px 0 16px 0;padding-left:22px;font-size:18px;line-height:27px;color:rgb(79,94,112);}\r\n.zl-wrap li{margin-bottom:6px;}\r\n.zl-meta{font-family:'Poppins',sans-serif;font-size:13px;font-weight:400;color:#888;margin-bottom:20px;line-height:1.6;}\r\n.zl-toc{background:#F9F9F9;border:1px solid #E0E0E0;border-top:4px solid #27BA66;padding:20px 24px;margin:28px 0;border-radius:0 0 6px 6px;}\r\n.zl-toc p{font-family:'Poppins',sans-serif;font-weight:600;font-size:16px;margin:0 0 12px 0;color:rgb(79,94,112);line-height:1.4;}\r\n.zl-toc ol{margin:0;padding-left:20px;line-height:2.2;}\r\n.zl-toc a{font-family:'Poppins',sans-serif;color:#27BA66;text-decoration:none;font-size:16px;font-weight:400;}\r\n.zl-toc a:hover{text-decoration:underline;}\r\n.zl-ukratko{border-left:5px solid #27BA66;background:#E8F8EF;padding:14px 18px;margin:24px 0 40px 0!important;border-radius:0 6px 6px 0;font-family:'Poppins',sans-serif;font-size:18px;font-weight:400;line-height:27px;color:rgb(79,94,112);}\r\n.zl-ukratko strong{color:#27BA66;font-weight:600;}\r\n.zl-paznja{border-left:5px solid #E65100;background:#FFF8E1;padding:14px 18px;margin:24px 0;border-radius:0 6px 6px 0;font-family:'Poppins',sans-serif;font-size:18px;font-weight:400;line-height:27px;color:rgb(79,94,112);}\r\n.zl-paznja strong{color:#E65100;font-weight:600;}\r\n.zl-stat{text-align:center;border-top:3px solid #27BA66;border-bottom:3px solid #27BA66;background:#F5F5F5;padding:18px 20px;margin:24px 0;}\r\n.zl-stat-num{display:block;font-family:'Poppins',sans-serif;font-size:36px;font-weight:600;color:#27BA66;}\r\n.zl-stat-lbl{display:block;font-family:'Poppins',sans-serif;font-size:13px;font-weight:400;color:#888;margin-top:5px;}\r\n.zl-table{width:100%;border-collapse:collapse;margin:16px 0 24px;overflow-x:auto;display:block;font-family:'Poppins',sans-serif;font-size:16px;font-weight:400;color:rgb(79,94,112);}\r\n.zl-table th{background:#27BA66;color:#fff;padding:11px 14px;text-align:left;font-family:'Poppins',sans-serif;font-size:15px;font-weight:600;white-space:nowrap;}\r\n.zl-table td{padding:10px 14px;border:1px solid #ddd;vertical-align:top;line-height:1.55;}\r\n.zl-table tr:nth-child(even) td{background:#F5F5F5;}\r\n.zl-table tr:nth-child(odd) td{background:#fff;}\r\n.zl-hr{border:none;border-top:1px solid #E0E0E0;margin:40px 0;}\r\n.zl-author{background:#F9F9F9;border-left:4px solid #27BA66;padding:14px 18px;margin:8px 0;font-family:'Poppins',sans-serif;font-size:16px;font-weight:400;color:rgb(79,94,112);line-height:1.6;}\r\n<\/style>\r\n<div class=\"zl-wrap\">\r\n<p class=\"zl-meta\">\r\n  <strong>Updated:<\/strong> April 2026 &nbsp;|&nbsp; <strong>Next review:<\/strong> October 2026\r\n<\/p>\r\n<p>Two companies agree on an enterprise value of \u20ac50 million. The deal is supposed to close in sixty days. But between signing and closing, the seller pays out a dividend to its shareholders, the working capital drops below the agreed target, and net debt increases by \u20ac2 million. Who bears those consequences, and how exactly does the final price get calculated? The answer is not in the headline number. It is in the price mechanism written into the Sale and Purchase Agreement.<\/p>\r\n<p>This is the choice that determines how a deal actually settles financially: locked box or completion accounts. Most acquirers and founders only encounter it once or twice in their careers. Getting it wrong can mean months of post-closing disputes over sums that seem modest relative to the deal size but are expensive and distracting to resolve.<\/p>\r\n<p>This article explains how each mechanism works, what each one protects, and how to decide between them in a transaction involving a Serbian company or target.<\/p>\r\n<div class=\"zl-stat\">\r\n  <span class=\"zl-stat-num\">~40%<\/span>\r\n  <span class=\"zl-stat-lbl\">of M&amp;A post-closing disputes relate to purchase price adjustments under completion accounts mechanisms (Association of Corporate Counsel, M&amp;A Survey 2024)<\/span>\r\n<\/div>\r\n<div class=\"zl-toc\">\r\n  <p>Contents<\/p>\r\n  <ol>\r\n    <li><a href=\"#price-mechanism\">Why the Price Mechanism Matters in M&amp;A<\/a><\/li>\r\n    <li><a href=\"#ebitda\">From EBITDA to Final Price: Bridging the Gap<\/a><\/li>\r\n    <li><a href=\"#completion-accounts\">How Completion Accounts Work<\/a><\/li>\r\n    <li><a href=\"#locked-box\">How the Locked Box Mechanism Works<\/a><\/li>\r\n    <li><a href=\"#leakage\">Leakage and Permitted Leakage: The Locked Box's Protective Mechanism<\/a><\/li>\r\n    <li><a href=\"#comparison\">Locked Box vs. Completion Accounts: A Practical Comparison<\/a><\/li>\r\n    <li><a href=\"#due-diligence\">The Role of Due Diligence in Choosing the Right Mechanism<\/a><\/li>\r\n    <li><a href=\"#serbia\">M&amp;A Price Mechanisms in Serbian Practice<\/a><\/li>\r\n    <li><a href=\"#which-one\">Which Mechanism Should You Choose?<\/a><\/li>\r\n    <li><a href=\"#faq\">Frequently Asked Questions<\/a><\/li>\r\n  <\/ol>\r\n<\/div>\r\n<h2 id=\"price-mechanism\">Why the Price Mechanism Matters in M&amp;A<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> The headline purchase price agreed between buyer and seller is rarely the amount that actually changes hands. Businesses generate revenues, incur debts, and consume or produce working capital every day. A price mechanism translates the agreed valuation into a final number that reflects the company's actual financial state at the moment ownership transfers. Choosing the wrong mechanism can expose either party to unexpected financial liability after closing.\r\n<\/div>\r\n<p>Buying a company is not like buying a car. You agree a price today, but legal ownership transfers weeks or months later. In the interim, the business keeps operating: cash flows in and out, debts fluctuate, working capital moves with the business cycle. A deal with no price mechanism would mean the buyer pays the agreed headline price regardless of what the business looks like on closing day. That benefits one party at the expense of the other.<\/p>\r\n<p>The <a href=\"https:\/\/zuniclaw.com\/en\/share-purchase-agreement-in-serbia\/\">Sale and Purchase Agreement (SPA)<\/a> addresses this through a defined price mechanism. Two frameworks dominate international and Serbian M&amp;A practice: completion accounts and the locked box. Each answers the same fundamental question differently: at what point in time is the business financially frozen for pricing purposes, and who bears the financial risk between signing and closing?<\/p>\r\n<p>The stakes are not abstract. A buyer who pays on a locked box but fails to properly review the reference balance sheet may inherit hidden liabilities. A seller who accepts completion accounts without careful definition of accounting policies may face a downward adjustment based on the buyer's interpretation of \"correct\" accounting months after the deal has closed.<\/p>\r\n<h2 id=\"ebitda\">From EBITDA to Final Price: Bridging the Gap<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> Most M&amp;A transactions are valued on an EBITDA multiple, which measures operating profitability before financing and tax costs. But EBITDA is a valuation tool, not a pricing mechanism. It tells you what the business is worth in broad terms. Completion accounts and the locked box translate that valuation into a precise, deal-specific final number that reflects the company's actual debt, cash, and working capital on the relevant reference date.\r\n<\/div>\r\n<p>When a buyer and seller negotiate an acquisition, they typically start from an agreed enterprise value derived from a multiple of <a href=\"https:\/\/zuniclaw.com\/en\/ebitda-ma\/\">EBITDA (earnings before interest, taxes, depreciation, and amortisation)<\/a>. A buyer might agree to pay \"8x EBITDA\" based on the target's trailing twelve-month results. For a company with \u20ac6 million in EBITDA, that means an enterprise value of \u20ac48 million.<\/p>\r\n<p>That enterprise value, however, is an equity-free number. It represents the value of the entire business, including its debt. The buyer does not want to pay \u20ac48 million and then discover that the company owes \u20ac5 million to a bank. Equity value is what the buyer actually pays to the seller for their shares, and it is derived from enterprise value by deducting net debt and adjusting for normalised working capital.<\/p>\r\n<p>This is precisely the gap that locked box and completion accounts are designed to fill. Both mechanisms answer the question: what is the equity value of this specific business, at this specific point in time, under these specific circumstances? EBITDA valuation sets the reference point. The price mechanism settles the final bill.<\/p>\r\n<div class=\"zl-paznja\">\r\n  <strong>Important:<\/strong> Confusing enterprise value with equity value is one of the most common mistakes in M&amp;A transactions. A seller who anchors to the EBITDA multiple without understanding the net debt and working capital adjustments that will follow may receive a significantly lower cash amount at closing than expected.\r\n<\/div>\r\n<h2 id=\"completion-accounts\">How Completion Accounts Work<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> Completion accounts set the final purchase price after closing, based on verified financial statements prepared as at the actual closing date. The buyer pays a provisional amount at closing, then receives a top-up or repays the difference once the closing accounts are agreed. The mechanism delivers accuracy at the cost of post-closing uncertainty and potential disputes over accounting methodology.\r\n<\/div>\r\n<p>The completion accounts mechanism is the more traditional of the two approaches, and it follows a clear logic: agree a provisional price now, verify the actual financial position later, and adjust accordingly.<\/p>\r\n<p>In practice, the process unfolds as follows. At signing, the parties agree on a provisional purchase price. They also agree on target figures for three key financial metrics:<\/p>\r\n<ul>\r\n  <li><strong>Net debt<\/strong> \u2013 the company's total financial indebtedness minus cash and cash equivalents<\/li>\r\n  <li><strong>Working capital<\/strong> \u2013 current assets minus current liabilities, measured against an agreed normalised target<\/li>\r\n  <li><strong>Net assets<\/strong> \u2013 the overall equity value of the business<\/li>\r\n<\/ul>\r\n<p>After closing, the seller prepares a draft set of completion accounts, typically within 30 to 60 days. These accounts are drawn up as at the closing date and capture the business's actual financial position on that day. The buyer then reviews the draft and has a defined period to raise objections. If the parties cannot agree, an independent accountant is appointed to determine the final figures.<\/p>\r\n<p>Once the completion accounts are finalised, the provisional price is adjusted. If net debt was higher than expected, the buyer's payment is reduced. If working capital exceeded the target, the buyer pays more. The net effect of all adjustments produces the final consideration.<\/p>\r\n<p>The clear strength of completion accounts is accuracy. Consider a seasonal retail business that signs in May but closes in December: the December balance sheet will look materially different from any historical reference point, and completion accounts will capture that difference precisely. The buyer pays for what they actually received.<\/p>\r\n<p>The trade-off is real. The mechanism introduces post-closing uncertainty that can run for months. Disputes about accounting policies, the classification of specific items, or the basis on which completion accounts are prepared are routine in complex transactions. Those disputes cost time and money, and they are corrosive to the post-closing relationship between buyer and seller.<\/p>\r\n<h2 id=\"locked-box\">How the Locked Box Mechanism Works<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> The locked box mechanism fixes the purchase price at signing, based on a historical balance sheet drawn up at an agreed reference date. The financial risk of the business shifts to the buyer from that date, even though legal ownership has not yet transferred. There are no post-closing price adjustments. The mechanism trades precision for certainty and is strongly preferred by sellers, particularly in private equity exits.\r\n<\/div>\r\n<p>The locked box takes the opposite approach to completion accounts. Rather than adjusting the price after closing, the parties agree a fixed purchase price at the moment of signing, based on a historical balance sheet prepared as at the \"locked box date.\" That date is typically the last audited or reviewed accounts of the target company.<\/p>\r\n<p>The name captures the concept well. Think of it as the financial position of the company being sealed inside a box at a fixed point in time. The buyer inspects what is in the box before signing, agrees a price for its contents, and the box does not change. From the locked box date onward, the economic risk and reward of the business pass to the buyer, even though legal ownership does not transfer until closing.<\/p>\r\n<p>An equity ticker is often used to compensate the buyer for the time value of money over the locked box period. If the locked box date is three months before closing, the buyer is effectively funding the business for those three months without yet owning it. The equity ticker is a daily interest accrual, calculated on the locked box price at an agreed rate, which reduces the purchase price paid at closing.<\/p>\r\n<p>The defining advantage is certainty. The seller knows exactly how much it will receive. The buyer knows exactly what it will pay. There is no post-closing adjustment process, no dispute about accounting policies, and no residual financial exposure for the seller after the deal closes. For a private equity fund completing a portfolio exit, a locked box is often a non-negotiable commercial requirement.<\/p>\r\n<div class=\"zl-paznja\">\r\n  <strong>Important:<\/strong> The buyer assumes the financial risk of the business from the locked box date, which may be several months before closing. If the business deteriorates during that period, the buyer bears the consequences. This risk is only partially mitigated by the equity ticker. Buyers who do not carefully analyse the period between the locked box date and signing may face an unpleasant surprise.\r\n<\/div>\r\n<h2 id=\"leakage\">Leakage and Permitted Leakage: The Locked Box's Protective Mechanism<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> Leakage is any value extracted from the company by the seller or its affiliates between the locked box date and closing, such as dividends, related-party payments, or below-market asset transfers. Leakage is prohibited and triggers a euro-for-euro price reduction. Permitted leakage covers pre-agreed ordinary-course payments, such as management salaries, and is carved out of the prohibition. Getting the leakage definition right is the most legally consequential drafting task in a locked box transaction.\r\n<\/div>\r\n<p>Since the financial risk shifts to the buyer at the locked box date, the buyer needs protection against the seller using the company's resources for its own benefit in the interim. This is where leakage provisions come in.<\/p>\r\n<p>Leakage covers any extraction of value from the company by or for the benefit of the seller or its connected persons between the locked box date and closing. The most common categories include:<\/p>\r\n<ul>\r\n  <li>Dividends or other distributions to shareholders<\/li>\r\n  <li>Management fees or advisory fees paid to seller-affiliated entities<\/li>\r\n  <li>Payments under related-party contracts at above-market rates<\/li>\r\n  <li>Asset transfers at below-market value to seller-connected parties<\/li>\r\n  <li>Waivers of amounts owed to the company by seller-affiliated persons<\/li>\r\n  <li>Transaction bonuses or deal-related payments to seller management<\/li>\r\n<\/ul>\r\n<p>Leakage triggers a euro-for-euro reduction in the purchase price. The SPA typically includes a seller warranty that no non-permitted leakage has occurred, and a corresponding indemnity if a breach is discovered.<\/p>\r\n<p>Permitted leakage is carved out of this prohibition. It covers pre-agreed ordinary-course payments that the parties acknowledge will occur between the locked box date and closing, most commonly salaries and bonuses to seller-affiliated management at rates consistent with historical practice. All permitted leakage is identified and quantified in a schedule annexed to the SPA.<\/p>\r\n<p>The drafting of the leakage definition is one of the most commercially significant tasks in a locked box transaction. An overly narrow leakage definition may leave the buyer exposed to value transfers that are technically outside the agreed categories. An overly broad definition may unreasonably constrain the seller's ability to operate the business normally before closing.<\/p>\r\n<h2 id=\"comparison\">Locked Box vs. Completion Accounts: A Practical Comparison<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> Sellers generally prefer the locked box because it provides price certainty and eliminates post-closing exposure. Buyers traditionally prefer completion accounts because they pay for the verified closing-day financial position. The right choice depends on the quality of available financial information, the stability of the business, the length of the period between signing and closing, and the relative bargaining power of the parties.\r\n<\/div>\r\n<table class=\"zl-table\">\r\n  <thead>\r\n    <tr>\r\n      <th>Factor<\/th>\r\n      <th>Locked Box<\/th>\r\n      <th>Completion Accounts<\/th>\r\n    <\/tr>\r\n  <\/thead>\r\n  <tbody>\r\n    <tr>\r\n      <td><strong>Price certainty<\/strong><\/td>\r\n      <td>Fixed at signing<\/td>\r\n      <td>Determined after closing<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Post-closing disputes<\/strong><\/td>\r\n      <td>Limited to leakage claims<\/td>\r\n      <td>Full adjustment process; frequent disputes<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Financial risk allocation<\/strong><\/td>\r\n      <td>Buyer bears risk from locked box date<\/td>\r\n      <td>Seller bears risk until closing day<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Preferred by<\/strong><\/td>\r\n      <td>Sellers; private equity exits<\/td>\r\n      <td>Buyers; strategic acquirers<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Requires<\/strong><\/td>\r\n      <td>Reliable recent historical accounts<\/td>\r\n      <td>Agreed accounting policies and targets<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Best suited to<\/strong><\/td>\r\n      <td>Stable businesses; competitive auctions<\/td>\r\n      <td>Volatile or seasonal businesses<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Administrative complexity<\/strong><\/td>\r\n      <td>Lower post-closing<\/td>\r\n      <td>Higher; 30\u201390 day adjustment process<\/td>\r\n    <\/tr>\r\n    <tr>\r\n      <td><strong>Time value compensation<\/strong><\/td>\r\n      <td>Equity ticker<\/td>\r\n      <td>Reflected in closing-day accounts<\/td>\r\n    <\/tr>\r\n  <\/tbody>\r\n<\/table>\r\n<p>The choice also reflects the deal structure. In a competitive auction process, where a seller has multiple bidders and wants a clean, predictable outcome, the locked box is almost always the default. Bidders who insist on completion accounts in a competitive process may find themselves at a commercial disadvantage. In bilateral deals with fewer time pressures and where the buyer has more negotiating leverage, completion accounts remain common.<\/p>\r\n<h2 id=\"due-diligence\">The Role of Due Diligence in Choosing the Right Mechanism<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> Due diligence findings directly shape the choice of price mechanism. Well-maintained, consistently prepared accounts support a locked box. Accounts with irregularities, aggressive revenue recognition, or complex related-party transactions push buyers toward completion accounts. Working capital analysis during due diligence is equally critical: understanding the target's working capital seasonality and composition is essential both for setting a sensible completion accounts target and for assessing whether a locked box period carries unacceptable financial exposure.\r\n<\/div>\r\n<p>Before any meaningful choice between locked box and completion accounts can be made, the buyer needs to understand what the target's financial position actually looks like. That is the purpose of <a href=\"https:\/\/zuniclaw.com\/en\/due-diligence-serbia\/\">financial due diligence<\/a>, conducted in the weeks between signing the non-disclosure agreement and finalising the SPA.<\/p>\r\n<p>Due diligence findings shape the mechanism choice in concrete ways. If the target's accounts are well-maintained, subject to regular audit, and consistently prepared, a locked box becomes viable. The buyer can have reasonable confidence in the reference balance sheet. If the accounts show aggressive revenue recognition policies, significant related-party transactions that are difficult to disentangle, or gaps in financial controls, the buyer will typically insist on completion accounts. The ability to reprice on closing-day verified figures is too valuable to give up.<\/p>\r\n<p>Working capital analysis matters for both mechanisms. For completion accounts, the buyer needs to understand the target's normalised working capital position in order to set a sensible target. Setting the target too low benefits the seller; too high benefits the buyer. For a locked box, working capital analysis tells the buyer whether the period between the locked box date and closing carries significant financial risk, particularly in seasonal businesses where working capital can swing sharply.<\/p>\r\n<p>Legal due diligence also feeds into the decision. Undisclosed liabilities, pending litigation, or regulatory exposures identified during the process may lead parties to build additional protections into the SPA price mechanism, or to shift toward completion accounts to preserve flexibility to address last-minute developments.<\/p>\r\n<p>For M&amp;A transactions in Serbia, Zunic Law advises on the full <a href=\"https:\/\/zuniclaw.com\/en\/mergers-and-acquisitions-serbia\/\">mergers and acquisitions process<\/a>, from early structuring through due diligence coordination and SPA negotiation.<\/p>\r\n<h2 id=\"serbia\">M&amp;A Price Mechanisms in Serbian Practice<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> The Serbian M&amp;A market has grown considerably in sophistication over the past decade. The technology and software sector provides the clearest illustration of how local deal dynamics shape mechanism choice. Founders and early-stage investors typically prefer the locked box for its certainty, but the quality of Serbian tech companies' financial records often requires substantial pre-signing work to construct a reliable reference balance sheet. Hybrid approaches are common in practice.\r\n<\/div>\r\n<p>Serbia's position as a regional technology hub has brought a wave of M&amp;A transactions involving software companies, product-focused startups, and established IT service providers. These transactions often involve founders or early-stage investors on the sell side, acquiring companies from Western Europe or North America on the buy side, and Serbian legal and financial advisers coordinating both.<\/p>\r\n<p>The locked box is the preferred mechanism for most Serbian tech exits. Founders want a clean outcome: a fixed price, no post-closing exposure, and no drawn-out adjustment process that keeps them financially tied to a business they have just sold. Private equity funds that have invested in <a href=\"https:\/\/zuniclaw.com\/en\/tech-ma\/\">Serbian tech companies<\/a> share that preference.<\/p>\r\n<p>The practical obstacle is the quality of the reference balance sheet. Many Serbian technology companies, particularly those that have grown rapidly from a founder-led model, maintain financial records that satisfy tax compliance requirements but are not structured in a way that supports a robust locked box. Revenue recognition policies, treatment of deferred income, intercompany arrangements between founder-related entities, and the distinction between employees and independent contractors can all create ambiguity when constructing the locked box accounts.<\/p>\r\n<p>In practice, this has led to hybrid approaches. Parties agree on a locked box structure but invest significant effort in the pre-signing due diligence phase to normalise the reference balance sheet and agree on specific adjustments. The permitted leakage schedule in Serbian tech deals tends to be more detailed than in comparable Western European transactions, reflecting the need to address founder-related payments and compensation structures that are specific to earlier-stage companies.<\/p>\r\n<p>A notable transaction that illustrates how innovative Serbian technology companies can attract global acquirers is the acquisition of Wonder Dynamics by Autodesk, in which <a href=\"https:\/\/zuniclaw.com\/en\/mergers-and-acquisitions-serbia\/\">Zunic Law represented Wonder Dynamics<\/a>.<\/p>\r\n<h2 id=\"which-one\">Which Mechanism Should You Choose?<\/h2>\r\n<div class=\"zl-ukratko\">\r\n  <strong>In a nutshell:<\/strong> There is no universally correct answer. The locked box suits sellers seeking price certainty in competitive processes with stable, well-documented financials. Completion accounts suit buyers who need verified closing-day figures, particularly where the business is volatile or the accounts are unreliable. In either case, the quality of drafting in the SPA is as important as the mechanism chosen: poorly drafted provisions in either structure produce the disputes that both are designed to avoid.\r\n<\/div>\r\n<p>The locked box tends to be the right choice when the seller is prioritising a clean exit, the transaction is running as a structured auction, the business has stable financials and recently audited accounts, and the locked box period is short or adequately compensated by an equity ticker.<\/p>\r\n<p>Completion accounts tend to be the right choice when the buyer does not have full visibility into the target's financial position, the business is financially volatile or has complex seasonal working capital movements, the historical accounts are not sufficiently reliable to serve as a reference balance sheet, or material changes to the business are expected between signing and closing.<\/p>\r\n<p>In either case, the drafting of the relevant SPA provisions deserves careful attention. Completion accounts mechanisms require precise definition of accounting policies, a clear and workable dispute resolution procedure, and unambiguous financial targets. Locked box mechanisms require airtight leakage definitions, a well-constructed reference balance sheet, and, where relevant, a properly calibrated equity ticker.<\/p>\r\n<p>Both mechanisms are legitimate, well-tested tools. The one that fits your transaction will depend on the characteristics of the business, the quality of its financial information, the nature of the deal process, and the relative bargaining positions of buyer and seller. Getting that choice right, and drafting the resulting provisions with precision, is where legal advice adds the most value in an M&amp;A transaction.<\/p>\r\n<p>Zunic Law advises buyers, sellers, and investors on the full M&amp;A lifecycle, including price mechanism selection, SPA negotiation, and post-closing disputes. For advice on structuring your transaction, visit our <a href=\"https:\/\/zuniclaw.com\/en\/solutions\/\">practice areas page<\/a>.<\/p>\r\n<h2 id=\"faq\">Frequently Asked Questions<\/h2>\r\n<!-- Developer note: Apply FAQPage JSON-LD schema to all Q&A pairs below via WPCode -->\r\n<h3>What is the main difference between a locked box and completion accounts?<\/h3>\r\n<p>The locked box fixes the purchase price at signing based on a historical balance sheet, with no post-closing adjustments. Completion accounts determine the final price after closing, based on financial statements prepared as at the actual closing date. The locked box offers certainty; completion accounts offer accuracy. Sellers typically prefer the locked box; buyers often prefer completion accounts.<\/p>\r\n<h3>What is leakage in a locked box transaction?<\/h3>\r\n<p>Leakage is any value extracted from the company by or for the seller's benefit between the locked box date and closing, such as dividends, management fees, related-party payments at above-market rates, or asset transfers at below-market value. Leakage is prohibited and triggers a euro-for-euro reduction in the purchase price. Pre-agreed ordinary-course payments, such as normal management salaries, are carved out as \"permitted leakage\" in a schedule to the SPA.<\/p>\r\n<h3>Which mechanism is more common in Serbian M&amp;A transactions?<\/h3>\r\n<p>The locked box has become the preferred mechanism in most Serbian tech and private equity-driven transactions. Sellers want price certainty and a clean exit. Completion accounts remain common in transactions where the buyer has limited financial visibility, the business is volatile, or the historical accounts are insufficiently reliable to support a locked box. Both mechanisms are used, and the choice depends on the specific transaction dynamics.<\/p>\r\n<h3>What is an equity ticker in a locked box deal?<\/h3>\r\n<p>An equity ticker is a daily interest accrual that compensates the buyer for the time value of money during the period between the locked box date and closing. Since the buyer bears the financial risk of the business from the locked box date but does not pay the purchase price until closing, the equity ticker effectively reduces the purchase price by a daily amount calculated on the locked box price at an agreed interest rate.<\/p>\r\n<h3>Can completion accounts disputes be avoided?<\/h3>\r\n<p>They can be significantly reduced through precise drafting. The most effective prevention measures are agreeing detailed accounting policies in the SPA that are specifically tailored to the target company, defining the financial metrics (net debt, working capital, net assets) with sufficient specificity to leave limited room for interpretation, and including a robust expert determination procedure as a fallback mechanism. Even well-drafted agreements carry some residual dispute risk; completion accounts simply require more careful drafting than a locked box to deliver a clean outcome. For M&amp;A legal advice in Serbia, see our <a href=\"https:\/\/zuniclaw.com\/en\/mergers-and-acquisitions-serbia\/\">M&amp;A practice<\/a>.<\/p>\r\n<p style=\"font-family:'Poppins',sans-serif;font-size:14px;font-weight:600;color:rgb(79,94,112);margin:32px 0 8px 0;\">About the authors<\/p>\r\n<div class=\"zl-author\">\r\n  <strong>Written by: <a href=\"https:\/\/zuniclaw.com\/team\/kristina-jevtic\/\" target=\"_blank\" rel=\"noopener\">Kristina Jevti\u0107<\/a><\/strong>, Of Counsel | Zunic Law<br>\r\n  Kristina Jevtic is Of Counsel at Zunic Law Belgrade. Her areas of specialisation include corporate law and structural reorganisations, EU company law, insolvency law, international commercial law and intellectual property law.\r\n<\/div>\r\n<div class=\"zl-author\" style=\"margin-top:8px;\">\r\n  <strong>Reviewed by: <a href=\"https:\/\/zuniclaw.com\/team\/tijana-zunic-maric\/\" target=\"_blank\" rel=\"noopener\">Tijana \u017duni\u0107 Mari\u0107<\/a><\/strong>, Partner | Zunic Law<br>\r\n  Tijana Zunic Maric is a partner at Zunic Law, specialising in corporate law, M&amp;A transactions and labour law. She advises domestic and international clients on structural reorganisations, corporate restructuring and regulatory compliance. Zunic Law is Law Firm of the Year for Serbia 2024 and 2025 according to the Lexology Index.\r\n<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Updated: April 2026 &nbsp;|&nbsp; Next review: October 2026 Two companies agree on an enterprise value of \u20ac50 million. The deal is supposed to close in sixty days. But between signing and closing, the seller pays out a dividend to its shareholders, the working capital drops below the agreed target, and net debt increases by \u20ac2 [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":74790,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[112],"class_list":["post-74789","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-law-en"],"_links":{"self":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/74789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/comments?post=74789"}],"version-history":[{"count":7,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/74789\/revisions"}],"predecessor-version":[{"id":74868,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/posts\/74789\/revisions\/74868"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/media\/74790"}],"wp:attachment":[{"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/media?parent=74789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zuniclaw.com\/en\/wp-json\/wp\/v2\/categories?post=74789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}