A price adjustment mechanism in M&A whereby the company's accounts are prepared as at the closing date and the final price is calculated afterwards, adjusting for net debt, working capital, and other items.
In a company acquisition, the price is usually not a fixed number agreed and paid. It is a provisional number that is adjusted after closing, when the company’s actual accounts are prepared as at the closing date. That adjustment process is called completion accounts and it is the most widely used pricing mechanism in the Spanish market.
Completion accounts (also called closing accounts) are a post-closing price adjustment mechanism whereby:
It is a “settle later” mechanism: the parties close the deal at an estimated price and adjust it once they have the real numbers.
At closing, the buyer pays an estimated price based on:
The buyer (typically) prepares a balance sheet as at the exact closing date, applying the accounting principles agreed in the SPA. Usual timeframe: 30-60 days after closing.
The seller receives the accounts and has a period (15-30 days) to review them and submit objections.
If there is disagreement, the parties negotiate. If they cannot reach agreement, an independent auditor (usually a Big Four or other previously agreed firm) resolves the disputed items. Their decision is binding.
The difference between the provisional price paid and the final price per the closing accounts is calculated. If the final price is higher, the buyer pays the difference to the seller. If lower, the seller returns the difference (or it is deducted from the escrow).
| Aspect | Completion accounts | Locked box |
|---|---|---|
| Price adjustment | Post-closing | No post-closing adjustment |
| Price certainty | Low until settlement | High from signing |
| Economic risk | Seller’s until closing, buyer’s after | Buyer’s from reference date |
| Post-closing complexity | High | Low |
| Common disputes | Frequent | Infrequent (except leakage) |
| Seller preference | Lower | Higher |
| Buyer preference | Higher | Lower |
Completion accounts are the dominant mechanism in Spain because:
An engineering company in southern Spain is sold at an Enterprise Value of 15 million. Normalised working capital is 2.8 million.
At closing (provisional price):
Closing accounts (45 days later):
Adjustment:
Typically 60 to 90 days from closing. The buyer prepares the accounts, the seller reviews them, and if disputes arise, an independent auditor resolves them. The process can be extended if discrepancies are significant.
Usually the buyer, because they control the company after closing. The seller has the right to access the accounting information, review the accounts, and dispute any item they consider incorrect.
Yes. It is one of the mechanisms that generates the most litigation in M&A. Disputes typically focus on classifications (is it debt or working capital?), accounting principles (which depreciation policy applies?), and provisions (are they sufficient?). A well-drafted SPA with clear accounting principles significantly reduces dispute risk.
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