The locked box mechanism: sell once, keep your price

You sell your company twice: once on the handshake, and again when the lawyers haggle over price. Most founders lose money in that second sale. The locked box mechanism stops that quiet drain.

Here’s the truth: deal certainty beats headline price. If you want a clean exit, this switch turns chaos into clarity.

Why this matters now

• Time kills deals. Fatigue taxes founders. The longer a deal drags, the more buyers chip away—and the more you concede just to get it done.
• You didn’t build a company to watch your number erode in a maze of post-completion adjustments. A locked box removes the price fights waiting for you after closing.

What the locked box really is, in plain English

• Picture a safe you seal on a specific date—the locked box date. From that day, the economic benefit of the business belongs to the buyer.
• You agree the price off clean accounts at that date. No working capital tug-of-war after closing. No bottomless reconciliations. No moving target.
• You promise there’s no “leakage”: no value leaves the business to you or related parties after the locked date, except what you both agree in advance as permitted and priced in.
• You can add a ticking fee—often called a value accrual—to reflect profit that builds between the locked date and completion.
• Simple. Predictable. Fast.

A quick story

Maya built a high-margin software company with tight monthly reporting. She nearly signed on completion accounts. Her banker nudged her to switch to a locked box. She closed six weeks faster, dodged a five-month working capital dispute, and banked an extra two percent via a clean value accrual. Same buyer. Cleaner deal. Better number.

Could you use that kind of certainty right now?

When it shines—and when it doesn’t

• Use a locked box when your numbers are steady, your reports are reliable, and your revenue is recurring. Buyers trust clarity. Certainty earns a simplicity premium.
• If your business is seasonal, capital-hungry, or volatile, a buyer may push back. That’s not a red flag—it means you need stronger data or a different structure. You can still use a locked box, but you must show the box is truly locked.
• Ask yourself: if a stranger reviewed your last 12 months of monthly accounts, would they see a calm pattern or a bouncing line?

How to set it up without getting burned

• Pick a locked date you can defend. Recent, clean, and audited is ideal. If no audit, solid monthly management accounts with clear reconciliations can work.
• Define leakage with zero wiggle room. Dividends, management fees, related-party spend, off-budget bonuses—all leakage unless explicitly permitted. Then list permitted leakage and price it in.
• Give the buyer comfort. Offer monthly reviews from the locked date to completion. Add a fair value accrual if profits naturally build. Keep it simple.

A quick checklist

• Locked date agreed, accounts final and shared
• Leakage tightly defined; permitted leakage listed and priced
• Value accrual agreed (fixed rate or profit-based formula)
• Monthly reporting access promised until completion

Negotiation angles that actually move your number

• As the seller: remove uncertainty and charge for the simplicity premium. Push for a clean no-leakage covenant with a short, unambiguous schedule of what’s allowed. Add a value accrual that reflects your momentum.
• As the buyer: they’ll ask for access and comfort. Offer a monthly update call and simple reporting. It costs you almost nothing and protects your price.
• Watch the fine print. Some buyers slip in “mini-adjustments” that smell like completion accounts by another name. Keep the box locked—or you’re back to a moving price.

The biggest fears, answered

• Will I leave money on the table if profits rise after the locked date? Not if you negotiate a fair value accrual—set a daily rate or link it to expected profit. With solid data, buyers accept it.
• What if the buyer worries about cash drains before closing? That’s exactly what no leakage covers. If anything slips, it’s repaid or rolled into the price. The rules are written before you sign.
• Is this only for big deals? No. It works beautifully for founder-led sales where the story is simple and the books are tight.

Common mistakes that cost founders millions

• Don’t lock the box off old accounts. Pick a date you can defend, then keep feeding the buyer clean monthly numbers.
• Don’t leave gray areas in leakage. If you pay a family member, reimburse travel, or settle tax—stop it, schedule it, or price it. Surprises invite price chips.
• Don’t ignore working capital seasonality. If cash swings, explain it in the deck and the contract. Clarity now is price protection later.

A little discipline here can move your net by seven figures.

The human side

A locked box is about peace. You know the price, the rules, the date. No midnight emails about inventory counts or obscure definitions. Deals die on trust. Locked boxes create trust because they’re boring. Boring is your friend at the finish line.

How to raise it with a buyer

• Lead with certainty. Offer the locked box, share the clean accounts, and explain the no-leakage promise. Invite diligence, not debate. Buyers who want speed respect sellers who think like owners and act like CFOs.
• Frame it as win–win. They get economic benefit from the locked date; you get price certainty. Everyone gets to closing faster.
• If a buyer insists on completion accounts, ask what they’re worried about—and solve that worry with data, not with a moving price.

Key takeaway

Price certainty is profit. A locked box turns your last months of trading into a fixed price, backed by clear rules—so you don’t sell your company twice.

One question before you decide

If you signed tomorrow, would you be proud of the number that actually lands in your bank after the dust settles—or would you rather lock the box and know?