What is the difference between completion accounts and locked box under Dutch law?

Dutch term: Completion accounts vs locked box | Legal basis: Freedom of contract

In Dutch M&A transactions, the purchase price can be determined through either a completion accounts mechanism or a locked box mechanism. Completion accounts set a provisional price at signing that is adjusted based on the target's financial position at closing (typically net debt and working capital). The locked box mechanism sets a fixed price at signing based on a reference date balance sheet, with no post-closing adjustment.

Completion accounts give the buyer certainty about the value received but create post-closing disputes about the adjustment calculations. The locked box gives the seller certainty about the price but requires protection against 'leakage' (value extraction from the target between the reference date and closing). Each mechanism has its own standard contractual protections and dispute resolution procedures.

Why it matters for international businesses

For international buyers and sellers of Dutch companies, the choice between completion accounts and locked box affects the deal dynamics, the negotiation complexity and the post-closing dispute risk.