The Role of Warranties and Indemnities in Protecting Buyers in Acquisitions
When purchasing a business/shares, buyers want assurance that they will be getting what they pay...
Corporate and Commercial
When it comes to selling your company, one crucial element that contributes to a smooth transition of ownership is the use of Completion Accounts. These financial snapshots play a pivotal role in defining the final financial terms of the deal. In this concise guide, we unravel the essence of Completion Accounts.
What Are Completion Accounts?
Completion Accounts are typically prepared after the completion date but with reference to the completion date. They provide an accurate picture of the company's financial position at the moment of transfer, and therefore determine the purchase price based on the company's actual financial position at the completion date.
Why Completion Accounts Matter
How Completion Accounts Work
In a situation where completion accounts come into play, the involved parties reach an initial purchase price agreement by concurring on an estimate of the anticipated equity value as at the completion date. Any discrepancies stemming from changes in cash, liabilities, assets, working capital or value generally between the agreed date and the completion date are typically the responsibility of the seller and are adjusted in the completion accounts.
Common adjustments may include:
Once all adjustments are made, and the completion accounts have been completed, the final purchase price is determined, ensuring that both buyer and seller are in alignment regarding the company's actual financial position post-completion.
For precise and tailored guidance on Completion Accounts or generally in relation to any other corporate matter, please call Sarah Ward, a Partner in our Corporate Team, on 01384 340 596 or e-mail Sarah at sward@georgegreen.co.uk for advice and assistance.
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