Some acquisitions establish price using an agreed historical financial position rather than adjusting every balance at completion. Rajeev Khandelwal’s documented M&A experience offers context for that approach. The commercial attraction is greater price certainty. Its usefulness depends on reliable accounts and a clear understanding of what happens between the reference date and ownership transfer, especially when value can move out of the business during that interval.
Examine the reference information
The financial statements used for pricing should provide a dependable account of cash, debt and operating balances. The buyer needs to understand their quality and the work supporting them. If the underlying information is weak, a fixed mechanism can lock in uncertainty rather than remove it. Diligence should therefore focus on the business position at the chosen date and any adjustments required to make that position commercially meaningful.
Control value movements
The agreement should identify which payments or transfers to sellers and related parties are permitted. Ordinary business expenses differ from extracting value that the buyer expects to receive. Clear definitions help both sides operate confidently before completion. The objective is to avoid disputes about whether a particular transaction belongs to normal trading or changes the economics of the business that was priced at the earlier reference date.
Follow performance after the date
A fixed price does not make subsequent trading irrelevant. Material changes can affect the acquisition thesis, funding needs and the buyer’s willingness to proceed under the agreed conditions. The parties should maintain appropriate reporting through completion. This allows the buyer to understand how the business is evolving while respecting the commercial allocation of risk established by the pricing mechanism and the conduct requirements agreed for the interim period.
Certainty rests on preparation
Credit Connect’s M&A advisory offering connects this subject to Rajeev’s wider transaction landscape. A locked-box approach can simplify final pricing when the evidence and protections fit the business. It is less useful as a shortcut around unresolved information. The commercial decision should therefore consider the quality of the historical accounts, the length of the interim period and the practical ability to monitor value movements until ownership changes.
