How to Track a Locked Box After Signing

How to track a locked box is a leakage-and-price-certainty ledger after the sale agreement is signed, not a working-capital true-up after close. For each deal, log the locked-box date, which accounts set the equity price, the fixed equity price, the leakage definition copied, permitted leakage copied, any leakage identified and claimed, and any ticking fee or value accrual. Raziel's working capital adjustment tracking page is the peg versus actual net working capital true-up. This page is the historical box that is not supposed to reopen.

This is not legal, tax, or investment advice. Raziel does not provide it. Copy the signed sale agreement. Do not invent a leakage schedule.

What this locked-box ledger is (and is not)

A locked-box mechanism fixes the equity price by reference to agreed historic accounts at a locked-box date, then generally does not reopen that price after completion except for leakage (and sometimes a pre-agreed value accrual). Lewis Silkin's note (updated February 24, 2025) contrasts that with completion accounts, which true up working capital and net debt to the completion-date balance sheet. From the locked-box date, the target is treated as run for the buyer's benefit. "Leakage" is value extracted by or for the seller. The usual protection is a pound-for-pound (or dollar-for-dollar) no-leakage indemnity, plus warranties that there has been no leakage from the locked-box date to signing, and covenants from signing to completion. Paul Hastings (June 30, 2026) describes locked box as very common in UK and European private equity-led deals, while U.S. deals more often still use completion accounts, with growing but still less established U.S. interest in locked box. Those are practice notes. Your agreement controls.

Seven columns on one locked-box row

Open one row per sale agreement that uses a locked box. Attach the locked-box accounts and the leakage schedule.

• Locked-box date. The date of the locked-box accounts. Lewis Silkin: the date should not be so historic that leakage risk and profit variance blow up, and not so close to completion that the buyer cannot diligence the accounts before signing. Copy the signed date.

• Locked-box accounts. Which statements set cash, debt, and working capital for the equity price (last audited accounts, or a special-purpose balance sheet). Store the PDF and who prepared it.

• Fixed equity price. The equity value written into the agreement from those accounts. Lewis Silkin: this is not adjusted further following completion except for leakage, and sometimes a ticking fee. That is the point of the box.

• Leakage definition copied. Typical items in Lewis Silkin's list include dividends and distributions, returns of capital, transaction expenses, payments to directors, deal-related bonuses, and other non-ordinary-course intra-group payments. Copy the signed definition. Do not paste that list as if it were yours.

• Permitted leakage copied. Lewis Silkin: often ordinary-course intra-group payments on arm's-length terms, identified items already priced (for example a dividend strip or monitoring fee), amounts provided for in the locked-box accounts, and ordinary-course salaries. Copy the schedule. Store each scheduled item as a child row if the dollars matter.

• Leakage identified and claimed. Date found, amount, whether a claim notice went out, and whether the seller repaid on a dollar-for-dollar basis. Keep this separate from indemnity-for-reps claims and from any working-capital escrow (a locked box usually has no NWC true-up).

• Ticking fee / value accrual (if any). Paul Hastings: sellers are often compensated for value generated between the locked-box date and completion, typically as a fixed daily accrual added to consideration (the "ticker"). Lewis Silkin also describes an interest-based value accrual on equity value, or a cash-flow-based accrual. Copy the signed rate or formula, or store none.

Copy the signed box, not a U.S. completion-accounts habit

Do not book a locked-box deal onto a working-capital peg row "because that is how U.S. deals work." Paul Hastings: completion accounts remain the U.S. standard; locked box is the cleaner exit PE sellers often want in competitive auctions. If your paper is a locked box, the only post-signing price movement that belongs here is leakage (and the ticker, if any). Ordinary trading profit stays in the company for the buyer. That is the design, not a bug.

When the ledger holds

The row holds if the seven cells are copied from the PDFs (or marked missing). It fails when you invent a peg, treat a leakage claim as a working-capital true-up, or leave scheduled permitted leakage unlabeled so it looks like a price cut. Raziel's MOIC calculator is only honest if that fixed equity price, any ticker, and any leakage repayment have dates and labels. Raziel does not interpret your locked-box accounts. Copy the seven columns.