The cash-free / debt-free convention defines the reference basis on which an acquisition price is established: the agreed price corresponds to a company delivered free of surplus cash and financial debt, with a closing adjustment reconciling actual levels at the completion date. It governs the bridge from enterprise value (EV) to equity value. The precise definition of what constitutes "cash" and "debt" — including IFRS 16 lease liabilities, pension obligations, deferred tax positions and earn-out liabilities — is frequently a complex negotiation point in SPA drafting.

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Example: an acquisition is signed at CHF 20.0 million enterprise value. At closing, actual net cash is CHF 1.8 million and financial debt is CHF 3.5 million. Equity value paid to the seller is CHF 20.0 + 1.8 - 3.5 = CHF 18.3 million. The SPA appendix precisely defines the items included in debt (lease liabilities, pension deficit, deferred tax liabilities) to prevent post-closing disputes.

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Hectelion documents the cash-free / debt-free definition with precision in every transaction to prevent ambiguities that generate post-closing disputes.