How long do completion accounts take?

It depends on the sale agreement, which sets each period. A common pattern gives the preparing party a couple of months after completion to produce the draft, the other party a month or so to review it, and a further period to negotiate before an independent accountant is appointed. An undisputed adjustment is often settled within a few months; a disputed one taken to an expert can take considerably longer.

Who prepares completion accounts, the buyer or the seller?

Either, as the agreement provides. The buyer often prepares them, because it controls the business and its records after completion. A seller with bargaining power may insist on preparing them itself, or on access to the books and staff during the buyer's preparation. Whoever prepares them, the other side has a right to review and object within a set period.

What are debt-like items in completion accounts?

Debt-like items are obligations that are not borrowings but that a buyer treats as if they were, because they arise from the period before completion and will take cash out of the business after it. Examples include unpaid tax for periods before completion, deferred consideration on an earlier acquisition, customer deposits for work not yet done, and supplier balances overdue beyond normal terms. Each one is negotiated: the agreement lists them, and an item must not be counted both in debt and in working capital.

What happens if the parties disagree on the completion accounts?

Usually the agreement sends the unresolved items to an independent accountant acting as an expert. The expert decides only the matters in dispute, applying the accounting principles the agreement sets, and the agreement commonly makes the decision final and binding except for manifest error. It is quicker and narrower than court proceedings or arbitration. The expert's costs are often shared, or allocated according to how far each side's position was upheld.

// WORKED EXAMPLETHE ARITHMETIC A DECISION RESTS ON

Completion Accounts: a Worked Example

The price is paid on an estimate and settled on an argument.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-07 · 5 MIN READ

// THE SHORT ANSWER

Completion accounts are how a buyer avoids paying for cash, debt and working capital it was promised but did not receive. The parties agree a price for the business as if it had no debt and a normal level of working capital. At completion the buyer pays on an estimate of the real figures. Afterwards one side draws up a balance sheet as at the completion day, the other reviews it, and the price moves by the difference, with an independent accountant deciding what they cannot agree. For a lender, the loan is drawn on the estimate, and the final number arrives months later.

BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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PART OF Corporate Lending and Credit Risk

// 01 — WHY THE PRICE IS SETTLED AFTER COMPLETION

A buyer values a business on its earnings, which gives an enterprise value. What it actually buys is the shares, and the shares come with whatever cash, borrowings and working capital the business holds on the day. A business that completes with an overdraft or with its debtors run down is worth less to the buyer than the same business with cash in the bank and a full order book in progress. Completion accounts measure those items on the day and turn the enterprise value into an equity price.

The working capital is measured against a target agreed in the sale agreement, the peg, which is set from the business's normal level; the normalised working capital page works how that level is found. Completion accounts do not set the peg. They find the actual figure on the day and move the price by the gap.

// 02 — HOW THE ADJUSTMENT IS CALCULATED

Equity price = enterprise value

− net debt at completion (debt and debt-like items, less cash)

+ (working capital at completion − peg)

Paid at completion: on estimates of net debt and working capital

Settled later: final price − estimated price, either way

The process has a common shape, though the periods are negotiated. One party, often the buyer, prepares the accounts within an agreed time after completion. The other has a period to review and object. Disagreements that survive negotiation go to an independent accountant acting as an expert, not an arbitrator, whose decision the agreement usually makes final except for manifest error. Many agreements hold part of the price in a retention or escrow account until the figure is settled.

Most disputes are about classification and policy rather than arithmetic. Is unpaid income tax for the period before completion debt, or working capital? Is a customer deposit a debt-like item? Must a provision be made on the same basis as last year's audited accounts, or on the accounting standard, where the two differ? The sale agreement's accounting principles, and the order in which they apply, decide most of the answers.

// 03 — THE EXAMPLE

A commercial cleaning contractor, constructed for this page like every figure in it, is sold for an enterprise value of US$36.0m with a working capital peg of US$4.0m. The seller's estimate at completion shows net debt of US$5.0m and working capital of US$4.3m. The buyer pays US$31.3m, funded by a US$17.0m acquisition loan and US$14.3m of its own equity.

Estimate Buyer's draft Expert

Net debt 5.0 5.9 5.4

Working capital 4.3 3.9 4.1

Working capital − peg +0.3 −0.1 +0.1

Equity price, US$m 31.3 30.0 30.7

Refund to buyer: 31.3 − 30.7 = 0.6

The buyer's draft added US$0.4m of unpaid tax for the months before completion and US$0.5m of accrued holiday pay to net debt, and a further US$0.4m provision against doubtful debts to working capital. The seller objected to all three. The expert agreed the tax was debt-like. The holiday pay was already a liability inside working capital, as it had been when the peg was calculated, so adding it to debt as well counted it twice. Half the new provision was supported by debtors more than four months overdue; the rest did not follow the policy in the agreement. The final price fell by US$0.6m, four months after completion. The numbers are the example's, not a market norm.

// 04 — THE MECHANISM IT IS COMPARED WITH

The alternative is a locked box, which fixes the price from an earlier balance sheet and does not adjust it, protecting the buyer instead with a promise that no value has leaked to the seller. Completion accounts give a more accurate price at the cost of a later process and the chance of a dispute; a locked box gives a certain price and leaves the buyer with the trading risk between the box date and completion. Completion accounts have long been the usual mechanism in Australian and New Zealand mid-market deals; in the UK both are common, and sellers there often press for a locked box.

DEFINED IN ONE PARAGRAPH → · LOCKED BOX → · THE WORKING CAPITAL PEG →

// 05 — WHERE IT DECIDES A FILE

An acquisition lender funds the estimate, so its credit paper rests on numbers the seller prepared. It reads two things in the sale agreement. The first is what happens to a refund: many facility agreements require money received under the sale agreement to be used as a mandatory prepayment, as the contractor's agreement did, so the US$0.6m reduced the loan rather than returning to the business. The second is a top-up. Had the expert found net debt of US$4.8m and working capital of US$4.6m, the price would have risen to US$31.8m, and the buyer would have owed US$0.5m. Whether that may be drawn from the revolving facility, or must come from new equity, is a question the lender answers before completion.

The opening balance sheet in the credit paper is also replaced by the completion accounts once they are final. A lender that tested day-one leverage on estimated net debt reads the final figure as a correction to its own file.

EQUITY CONTRIBUTION → · NET DEBT, AS A COVENANT DEFINES IT →

// QUESTIONS PEOPLE ASK

How long do completion accounts take?: It depends on the sale agreement, which sets each period. A common pattern gives the preparing party a couple of months after completion to produce the draft, the other party a month or so to review it, and a further period to negotiate before an independent accountant is appointed. An undisputed adjustment is often settled within a few months; a disputed one taken to an expert can take considerably longer.
Who prepares completion accounts, the buyer or the seller?: Either, as the agreement provides. The buyer often prepares them, because it controls the business and its records after completion. A seller with bargaining power may insist on preparing them itself, or on access to the books and staff during the buyer's preparation. Whoever prepares them, the other side has a right to review and object within a set period.
What are debt-like items in completion accounts?: Debt-like items are obligations that are not borrowings but that a buyer treats as if they were, because they arise from the period before completion and will take cash out of the business after it. Examples include unpaid tax for periods before completion, deferred consideration on an earlier acquisition, customer deposits for work not yet done, and supplier balances overdue beyond normal terms. Each one is negotiated: the agreement lists them, and an item must not be counted both in debt and in working capital.
What happens if the parties disagree on the completion accounts?: Usually the agreement sends the unresolved items to an independent accountant acting as an expert. The expert decides only the matters in dispute, applying the accounting principles the agreement sets, and the agreement commonly makes the decision final and binding except for manifest error. It is quicker and narrower than court proceedings or arbitration. The expert's costs are often shared, or allocated according to how far each side's position was upheld.

// NEXT TO IT

// ON WHOSE DESK

The seats that read this term in an ordinary week. Each page says what the seat is for, who arrives in it, and the shape of the round it runs.

Business relationship managerCarries a book of trading businesses — wins them, keeps them, and is the bank's voice when the answer is no.
Credit analystReads a borrower and writes the recommendation a decision-maker will act on.
Lending operations officerTurns an approval into a working facility — documentation, security, drawdown, and the register that says what the bank actually holds.

THE IN-TRAY · ONE MINUTE

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A short file on the ground this page covers. Every option opens with how far it sits from a senior banker’s read.

THE FIRST QUESTION · THE LOAN · CAPACITY

Two borrowers each carry debt of three times EBITDA. One sells software on three-year contracts; the other builds new houses for sale.

Is three times the same risk for both?

5 MORE ON THE LOAN · CAPACITY →WHERE DO YOU READ FROM? THE PLACEMENT →

THE READING ROOMIN ONE PARAGRAPHCompletion accounts What are completion accounts, and how do they change an acquisition price?