Watch our latest edition of JSA Live, where partner Shraddha Krishnan Dash discusses two key mechanisms for determining the purchase price in M&A deals: the locked box method and the closing accounts adjustment method.
In the locked box approach, the price is fixed based on past financial statements, while in the closing accounts adjustment method, a tentative price is set and adjusted based on actual financials at closing. The former offers price certainty but shifts risk to the buyer, while the latter provides a more accurate financial picture.
Shraddha concludes that in the end, the choice depends on buyer profile, accounting practices, and market conditions.
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