Stella Lellos, left, and Lindsay Brocki, right, of Rivkin Radler. Courtesy photos Introduction
In private mergers and acquisitions (M&A) deals, purchase price adjustments play a crucial role in the determination of the final transaction value. These adjustments often hinge on net working capital calculations, which can introduce complexities and prolonged negotiations that detract from a smooth closing process. In response to these challenges, the locked box mechanism has emerged as a compelling alternative.The Locked Box Mechanism in Private M&A Transactions: A Streamlined Approach
Initially prevalent in the U.K. and Asia, the locked box approach is gaining traction in the United States due to the growing demand for expedited M&A transactions and a robust seller's market. The shift toward locked box structures is also driven by financial investors seeking cleaner and quicker negotiations.
October 28, 2024 at 08:00 AM
7 minute read
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Stella Lellos, left, and Lindsay Brocki, right, of Rivkin Radler. Courtesy photos
Introduction
In private mergers and acquisitions (M&A) deals, purchase price adjustments play a crucial role in the determination of the final transaction value. These adjustments often hinge on net working capital calculations, which can introduce complexities and prolonged negotiations that detract from a smooth closing process. In response to these challenges, the locked box mechanism has emerged as a compelling alternative.
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