The locked box mechanism is a price-setting approach in which equity value is fixed definitively at a historical balance sheet date (the locked-box date), eliminating post-closing price adjustments. Unlike completion accounts, there is no closing adjustment: the buyer bears the economic risk and benefit of the target from the locked-box date, in exchange for full protection against leakage. It provides price certainty from signing, simplifies closing mechanics and is the preferred mechanism in competitive sales processes and PE-to-PE transactions.

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Example: in a CHF 20.0 million locked-box acquisition with a 31 December lock date, the buyer accepts the fixed price regardless of working capital or cash movements between January and the March closing. In exchange, the seller warrants zero leakage during this period. A ticking fee of 5% p.a. compensates the seller for the period between lock date and closing — CHF 437,500 for a 3-month period — reflecting the economic risk transfer to the buyer.

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Hectelion advises on locked-box vs completion accounts selection, ticking fee calibration and permitted leakage structuring for both sellers and buyers.