Choice of record date The amount of the seller`s obligations with respect to the management of the business after the effective date is a critical element of buyer protection and a credible set of commitments must be able to be provided (and fulfilled). The effective balance sheet shall accurately reflect the resulting configuration and working capital, as well as the resulting liabilities of the entity, in the form in which it is delivered to the buyer. The setting of the purchase price of a private M&A transaction is an integral part of the commercial negotiation and therefore of the sales contract. In the United Kingdom, the two approaches normally used to calculate the price of the target transaction are either an adjustment to the final balance sheet or a locked box mechanism. Repayment of the debt It will then generally be subject to a final offer, calculated by referring to the accounts of the target group on the reference date. The starting point is the value of the company attributed to the target group, often calculated as several times the pre-tax profit. The buyer then adds up the cash, deducts the debt (and other items similar to debt) and corrects the discrepancies with the normalized working capital, just like on the date of the locked box. The result is the equity value it is willing to pay for the target audience, and it is this figure that is set as the purchase price in the acquisition contract. Adjustments to the value of the business for the calculation of the value of equity are commonly referred to as “bridge”. As a general rule, the seller also accepts, through the sales contract, a certain limitation of its activities between the date of entry into force and the conclusion of activities that may have a significant impact on the value of the transaction, for example.

B the seller`s agreement before the payment of dividends, the agreement of large or long-term contracts, the purchase of important capital goods, etc. .