Deal Structuring
Locked Box Mechanism
A valuation fixed to a historical balance sheet date with no post-closing true-up, giving the seller certainty on proceeds in exchange for restrictions on cash extraction before closing.
Seller Example
Promoter of a Mumbai FMCG distributor negotiates a locked-box structure at a fixed ₹40 Cr as of March 31, locking in exact proceeds regardless of how the business performs during the 4-month signing-to-closing gap, while carving out a permitted ₹50 Lakh leakage allowance for an already-committed promoter bonus.