Definition

Locked Box

Closing mechanism where price is fixed at a historical balance-sheet date with no post-close true-up.

Common in European deals. The economic interest in the business transfers as of the locked-box date (often a recent month-end). Sellers commit to a no-leakage covenant and benefit from any cash generated between locked-box and closing. The alternative is completion accounts, the US-default mechanism that trues up at close based on actual cash, debt, and working capital.