Points to consider when drafting completion account clause in SPA

1. How much will be paid on completion of the transaction? Typically, the parties will agree on the amount to be paid on completion based on the parties’ best estimate of the purchase price with adjustment to the purchase price post-completion.

2. How much of the price is subject to adjustment?

3. For the amount that is subject to adjustment, would it be put into an escrow account pending preparation and finalisation of the completion accounts?

4. Who will prepare the completion accounts?

5. What are the accounting methodologies, basis of preparation and policies when preparing the completion accounts?

6. When will the draft completion accounts be made available for the counterparty’s review?

7. What is the time period available for the counterparty to review the draft completion accounts and negotiate any disputed items? Typically, the SPA will state that if the reviewer of the draft completion accounts does not submit a notice to object in writing within the agreed time period, the draft completion accounts will be the final completion accounts.

8. When must the completion accounts be finalised if there is no dispute item or the disputed item is amicably resolved?

9. If the parties cannot agree on the remaining disputed items, what are the procedures of referring these items to independent expert account for determination? What are the procedures on agreeing on the appointment of the expert?

10. What is the role and remit of the expert?

11. How will the cost of appointment of the expert be borne?

12. When will be the actual adjustment (i.e. the payment/refund) to the purchase price be made?

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This post was originally posted on Linkedin on 14 February 2022. Follow me on Linkedin.