What are completion accounts?
Completion accounts are a purchase-price mechanism in M&A: the parties agree an enterprise value, then adjust the price after closing based on accounts drawn up as at the completion date — typically for actual cash, debt and working capital against agreed targets. The buyer pays for what the business actually contained on day one, not what a historical balance sheet showed.
Completion accounts vs. locked box
The locked box fixes the price at a past balance-sheet date and protects it with leakage covenants; completion accounts move the risk of change to the seller until closing. Buyers like the accuracy; sellers like locked-box certainty. The practical cost of completion accounts is the post-closing process: preparation, review, objection and expert-determination phases that can run for months — which is why the definitions of “cash,” “debt” and “working capital,” and the accounting hierarchy applied to them, are the most-litigated schedules in the SPA.
The drafting pressure points
Four items decide most disputes: the working-capital target (a single number or a range, and how seasonality was normalised); the hierarchy clause (specific policies, then consistent past practice, then GAAP/TFRS — order matters); items counted as debt-like (deferred revenue, bonus accruals, tax provisions); and who controls preparation — buyer prepares and seller objects, or the reverse. In Turkish deals, alignment between the SPA definitions and statutory (VUK) books deserves explicit language, because the two rarely match.
Which mechanism suits a startup exit?
Fast-moving SaaS businesses with clean monthly closes often prefer a locked box for certainty; completion accounts fit where working capital is volatile or the gap to signing is long.
Who resolves disagreements?
Usually an independent accounting expert acting as expert, not arbitrator — final and binding on the numbers, with courts or arbitration reserved for everything else.
Related: locked box, holdback/escrow.