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Accounts in Share Purchase Agreement

Accounts in Share Purchase Agreement: Understanding the Importance

When it comes to buying or selling shares, the Share Purchase Agreement (SPA) is one of the most significant documents involved in the process. The document outlines details such as the terms of the transaction, parties involved, and conditions for closing the deal. Additionally, the SPA includes various accounts that are integral to the agreement`s structure, including the completion accounts, the locked box accounts, and the earn-out accounts.

Completion Accounts

Completion accounts are essential to any Share Purchase Agreement. They are typically used to determine the final purchase price for the shares sold. The purpose of completion accounts is to provide an accurate measure of the net assets and liabilities of the company being sold. By doing so, the parties can agree on a fair purchase price. This is usually done by preparing a balance sheet for the company at a specific date, usually the completion date, and comparing it with the balance sheet of the company at the agreed-upon date, the base date.

Locked Box Accounts

Locked box accounts are an alternative to completion accounts that are becoming increasingly popular among parties involved in share purchase agreements. By using locked box accounts, the purchase price of the shares is agreed upon at an earlier date, usually the date of the signing of the SPA. The purchase price is then based on the company`s financial statements as of the agreed-upon date, which is typically a date that is several months before the completion date. This approach is beneficial for sellers, as it means that they receive the full purchase price upon completion, without the need for completion accounts adjustments.

Earn-Out Accounts

Earn-out accounts are used in Share Purchase Agreements when the purchase price of the shares sold is contingent on the company`s future performance. For example, if the company being sold is a start-up, it may not have an established track record of profitability. In such cases, the parties may agree that the purchase price is based on the company`s future performance, such as a percentage of future revenues or profits. Earn-out accounts allow the parties to achieve a fair purchase price while mitigating the risk for the buyer.


In conclusion, the accounts used in Share Purchase Agreements are essential for determining the final purchase price and ensuring a fair deal for all parties involved. Understanding the importance of completion accounts, locked box accounts, and earn-out accounts is crucial for anyone involved in buying or selling shares. As a professional, I hope this article has provided valuable insights into the significance of accounts in Share Purchase Agreements.

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