Completion accounts deal meaning

Subscription and shareholders’ agreement This Practice Note offers guidance for drafters preparing and/or reviewing a subscription and shareholders’ agreement relating to the allotment of shares (and, potentially, loan notes) in a private limited company incorporated in England and Wales by a private equity (or venture capital) fund investor (the investor) within a venture capital (VC) deal, where the structure provides for split exchange and completion, ie conditions must be met before completion of the subscription and shareholders’ agreement. The investment contemplated is into an existing company (the Company), with the current shareholders (typically the business’s founders) keeping the shares they have already been issued in the Company. Set out below are matters to weigh up when drafting and/or reviewing the principal provisions of a subscription and shareholders’ agreement (SSA). Parties The investee company Although the principal parties to the SSA will be the relevant investor and the Company’s founders, the Company will ordinarily be included as a party too, ie the vehicle in which the investor...

This Practice Note forms part of the Share purchase transaction collection. Timing Completion of a share purchase may occur at the same time as signing and executing the share purchase agreement (SPA), or on a later date. Where completion is conditional, it will take place later (a split exchange and completion). If no conditions apply, exchange and completion happen together. The schedule for post-completion obligations differs by item. Certain steps must be carried out in the days straight after completion (for example, paying stamp duty and submitting forms to Companies House), while other post-completion measures might arise only in specific situations or not at all (for example, pursuing a warranty claim), or might not require the parties’ lawyers to be involved (for example, earn-out consideration instalments paid in line with the payment timetable set out in the SPA). What happens during this phase? Completion A share purchase deal culminates on completion (also called closing). At that point, the necessary formalities to finalise and give effect to...

When someone acquires the share capital of a company, the deal is commonly described as one of the following: a completion accounts deal an accounts date deal a locked box deal Each label captures how the parties set or refine the purchase price for the target and affects the extent to which the buyer is safeguarded against historic tax exposures under the tax covenant (also called a tax deed). In virtually every transaction, a headline price for the shares is agreed first. That figure is then adjusted using an agreed approach—the most prevalent being completion accounts, accounts date, or locked box. For more detail on the purpose and effect of a tax covenant, see Practice Note: Why have a tax covenant? Completion accounts Under a completion accounts deal, the consideration is adjusted by reference to a set of accounts prepared as at the completion date...