Locked box finance: set your price, keep your upside

You built order from chaos. Now buyers are circling, and every conversation feels engineered to shave your number. Here’s the quiet move that flips the script, lets you set the price, and keeps the upside you’ve already earned.

This is about certainty. Not hope. Not maybe. Certainty you can take to the bank.

The deal killer you can dodge

Most founders get squeezed after the handshake. Price chips. Late-stage fights over working capital. Endless spreadsheets. A closing that drifts. By the time you sign, you’ve given back more than you ever planned.

You can stop that. Lock the price on a clean date, protect the cash you generate from that date to closing, and shut down the post-deal tug-of-war. That’s the simple power inside locked box finance.

What locked box finance really is

Picture a box. On a specific date, you put your business into that box with a full balance sheet and a clear snapshot of cash, debt, and working capital. You and the buyer agree that this snapshot sets the price. From that date to completion, there are no more price adjustments. No grand debate later. No surprise spreadsheets.

You keep the profit that accrues after the box date, usually through a simple daily ticker or a fixed amount baked into the price. The buyer gets a fixed price. You get protection on the value you’ve already created.

The box comes with a few rules, common sense when explained well:

• A locked date: usually a recent month-end with clean, reconciled numbers
• A no-leakage promise: no value moves to you or others outside a short permitted list
• A permitted list: normal salaries, routine bonuses, arm’s-length trading, nothing exotic
• A simple ticker: a fair daily amount that reflects the cash the business continues to generate

That’s it. Agree the snapshot. Agree the rules. Close faster with less drama.

Why this favours you when you’re ready to sell

If your business is steady or growing, a locked box shifts control to you. You sidestep the late-game squeeze that relies on complexity and fatigue. You get paid for time. You get paid for focus. You get paid for profit your team keeps producing while lawyers trade comments.

There’s a human angle too. Buyers love certainty. A fixed price and clean rules reduce their risk. They can take it to their committee without caveats. Good buyers move faster. Weak buyers reveal themselves early.

And there’s a cash advantage. With a locked box, you don’t bleed value through “adjustments.” You skip the dance around target working capital, post-close audits, and months of reconciliation that drain your energy, and your fees.

Where it can bite you

This isn’t magic. It works when your numbers are strong and your confidence is earned.

• Volatile business? A locked snapshot can cut against you. If you expect softness ahead, the buyer will push for a lower price or heavy restrictions.
• Sloppy accounts? You’ll spend your certainty in legal fees because the buyer won’t trust the snapshot.
• Leakage risk? One-off dividends after the box date, moving cash to a sister company, or changing director pay without agreement can blow up trust and price. Keep your normal rhythm and list anything unusual as permitted.
• Definitions matter. Net debt, debt-like items, and accounting quirks can hide land mines. Define terms in plain language and back them with schedules a smart twelve-year-old can follow.

How to set it up so it just works

• Choose the right date. Pick the most recent month-end with clean, reconciled numbers. If you have seasonality, don’t hide it. Explain it with data and choose a date you can defend.
• Clean the snapshot. Prepare a tight balance sheet, cash and debt schedule, and a simple working capital bridge. Put off-balance-sheet items on the page. Flag early customer payments or owed rebates. The goal: nothing to “discover” later.
• Define leakage in plain English. Normal salaries, normal bonuses, normal supplier payments, normal taxes, fine. Anything that moves value to you outside that list needs buyer consent or lands in the price. Keep a leakage log from the box date so you can answer any question in seconds.
• Agree a fair ticker. You’re selling a machine that makes money every day. The daily rate should reflect that. Peg it to a percentage of price or a simple equity return. If the buyer balks, ask what they think your business does between now and closing. Silence helps you.
• Keep operations boring. No dramatic changes after the box date without clearing them. No new debt. No big new risks. You want completion, not a new saga.
• Offer smart comfort. If the buyer needs it, offer a short escrow for real risks or warranty and indemnity insurance if the deal is large enough. These tools keep the box intact without creating back doors for price chips.

A quick story to make it real

A founder I worked with ran a business that threw off cash every week. The first buyer loved the story, then burned six weeks grinding on working capital and post-close adjustments. The headline price didn’t change. The value did.

We reset the process with a clean locked box. Month-end numbers. Tight leakage list. Simple daily ticker. The second buyer did focused diligence and signed at the number. The founder slept. The team kept shipping. The only thing that changed was the bank balance on completion day.

What to watch in negotiation

• Price with the box in mind. The ticker isn’t a rounding error, it’s your reward for time.
• Nail definitions. Everything that smells like debt goes on one schedule. Everything that smells like working capital goes on another. No loose ends.
• Shorten the gap. Push for a tight window between signing and completion. Align incentives with a clear long-stop date so drift has a cost.
• Put your finance lead in the room early. A calm, crisp walkthrough of the snapshot builds trust and speed.

Key takeaway

Price isn’t a number, it’s a system. Use locked box finance and your price becomes a promise, not a hope. The value you created is captured on a day you choose and defended by rules you set.

Your next move

If you locked your price at the last clean month-end and closed eight weeks later, would you feel calm or exposed? What has to change this week so calm is the only answer?