Who Gets the Cash You Make Before Closing Day

The clause nobody reads until it costs them money

Every sale has a gap. You sign the agreement on one day. Cash actually changes hands weeks or months later. In that gap, the business keeps running — invoices go out, payroll goes out, cash piles up or drains away. Someone has to decide who owns that value. That decision has a name most founders have never heard until it's already in their SPA: completion accounts vs locked box.

Two mechanisms. Two very different outcomes for your bank balance.

Completion accounts: pay now, true up later

Completion accounts price the deal twice. You agree an estimated price at signing, then — after completion — accountants (yours and theirs) build a fresh balance sheet as of the actual completion date. Cash, debt, and working capital get compared to a target. If the business held more cash or less debt than expected, you get a top-up. If it held less, you write a check back.

Sounds fair. It is fair, in theory. In practice it means:

The upside: the price reflects reality on the day it actually closes, not a stale snapshot.

Locked box: the price is set, full stop

A locked box does the opposite. Price gets fixed against a balance sheet dated *before* signing — the "locked box date." From that date forward, no adjustments. The buyer owns the economic risk and reward of the business from that date, even though they don't legally own it yet.

To make that fair, the seller signs up to no leakage — a promise that no value quietly left the business between the locked box date and completion. No surprise dividends, no inflated management fees, no forgiven loans to the founder's cousin. Anything that does count as leakage typically has to be repaid, pound for pound.

The upside: speed and certainty. No post-completion accounting fight. You know your number on signing day. The catch: if the business has a great quarter between the locked box date and completion, that upside belongs to the buyer — you already sold it.

Why this is a value lever, not a footnote

Here's the belief worth sitting with: founders treat this as boilerplate their lawyers will "sort out," when it's actually a pricing decision worth real money.

If your working capital swings seasonally, a locked box priced on the wrong month can quietly cost you. If your business is about to have its best quarter ever, signing a locked box gives that quarter away for free. If your numbers are clean and predictable, a locked box saves you the stress and legal spend of a post-completion accounting battle. There's no universally "better" mechanism — there's only the one that matches how your business actually behaves in the months around a sale.

Buyers know this. It's why private equity almost always pushes for locked box — certainty favors whoever's writing the check. Sellers with volatile or seasonal cash flow often need completion accounts to avoid giving away money they haven't even earned yet.

Nobody explains the trade-off because it's easier to hand you the template the last deal used. That's the whole industry, honestly — recycle the last founder's terms and call it standard practice.

This isn't legal or tax advice, and the exact drafting of "leakage," working capital targets, and completion mechanics should go through your own lawyer and accountant before you sign anything. But you should walk into that conversation knowing which mechanism protects *your* number — not just the one your buyer's counsel prefers.

The truth, first.