Closing Accounts (Completion Accounts)

Under the closing-accounts method, the final purchase price is determined only after completion of the transaction, on the basis of a balance sheet drawn up as at the closing date. Typical adjustment items are net debt, working capital and, where applicable, the cash balance as at the closing date.

The mechanism offers a high degree of accuracy but may lead to post-completion renegotiations and a greater process burden. Disputes are typically resolved via a defined dispute-resolution mechanism (often involving an expert arbitrator). Its counterpart is the locked-box method (see Locked Box).