Price and settlement

M&A and corporate finance glossary: 26 entries in English and Polish

M&A and corporate finance glossary: price and settlement

The entries in this section explain how an agreed valuation becomes the amount the seller receives at closing and afterward. They cover the bridge from enterprise value to the equity price, the two price mechanisms (locked box and closing accounts), deferred and contingent payments, and ways to secure payment.

Prepared by the Capital One Advisers team. Entries last reviewed: November 12, 2026.

Entries from A to Z (26):

Cash-free, debt-free basis

Polish: zasada cash free, debt free

The cash-free, debt-free basis is the convention of stating the offer price as the value of a business free of financial debt and surplus cash, assuming a normal level of working capital. The price of all the shares is then calculated by deducting net debt and debt-like items and, in a closing accounts deal, adjusting for the gap between actual working capital and the working capital peg. If net debt is negative, meaning free cash exceeds debt, the equity price can exceed the enterprise value.

More in the articles “Company debt before a sale. Too little costs you for years, too much costs you at the deal” and “Cash in the company’s price. Why a seller who fights over the operating minimum loses on the surplus”.

Closing accounts

Polish: rozliczenie na dzień zamknięcia

A closing accounts mechanism, also called completion accounts, is a pricing method in which the agreement sets a preliminary price and the final price is calculated after closing from a statement prepared as of the closing date under agreed accounting principles. Differences between the actual net debt and working capital and the amounts assumed in the preliminary price raise or lower the price. The benefits and risks of changes in these items up to closing therefore stay with the seller.

Not to be confused with: locked box.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

Contingent consideration

Polish: warunkowa część ceny

Contingent consideration is part of the price whose payment or amount depends on a future event specified in the agreement, for example obtaining a permit after closing, retaining a key customer, or meeting financial targets. It may be paid in cash or in shares. An earnout is a form tied to the company’s results or agreed milestones. It differs from deferred consideration in that it may be paid in a lower amount or not at all.

Debt-like items

Polish: pozycje o charakterze dłużnym

Debt-like items are liabilities and other obligations outside both financial debt and working capital that are deducted from enterprise value like debt when the price is calculated. Examples include declared but unpaid dividends, severance provisions, overdue tax liabilities, and deferred payments for earlier acquisitions. The agreement lists them so that no item reduces the price twice, for example once in net debt and again in working capital.

More in the article “Company debt before a sale. Too little costs you for years, too much costs you at the deal”.

Deferred consideration

Polish: odroczona płatność ceny / cena odroczona

Deferred consideration is part of the price, fixed in amount, that the buyer will pay after closing regardless of the company’s later results. The seller bears the risk that the buyer cannot pay, so the agreement should provide security, for example a bank guarantee or a guarantee from the buyer’s parent company. The agreement may also allow the buyer to reduce this amount by setting off its claims against the seller.

Earnout

Polish: earn-out

An earnout is part of the price that the buyer pays after closing if the company meets agreed targets, for example a revenue or EBITDA level or a project milestone. It helps bridge a valuation gap when the seller expects stronger results than the buyer does. Because the buyer usually controls the company after closing, the agreement should define how the metrics are calculated and how the buyer must run the business during the earnout period.

Not to be confused with: deferred consideration.

More in the article “Earn-out. How 40 percent of a company’s price disappears in the agreement’s definitions”.

Equity rollover

Polish: reinwestycja sprzedającego

An equity rollover lets the seller keep part of its stake by retaining some of its shares or taking shares in a company that will own the company sold directly or indirectly, for example a private equity fund’s holding company. The seller may contribute some of its shares in kind or reinvest part of the price. It then participates in changes in the value of the company sold, usually until the investor exits. Deal documents set the reinvestment terms; the organizational documents and often a shareholders’ agreement set the shareholder’s rights.

Escrow account

Polish: rachunek escrow

An escrow account is an account held by a bank or another independent party into which the buyer pays all or part of the price until agreed conditions are met. It can secure payment to the seller at closing or the buyer’s later claims, such as price adjustments or breaches of representations and warranties. The escrow agreement sets the release terms, including holding back amounts for timely claims still unresolved, and meanwhile neither party controls the funds alone.

Not to be confused with: notarial deposit.

Funds flow memorandum

Polish: zestawienie płatności przy zamknięciu

A funds flow memorandum is a document in which the parties agree before closing who pays whom, how much, and into which account at closing. Besides the price for the seller, it may cover repayment of the company’s bank loans, the deposit into an escrow account, and advisors’ fees. The amount wired to the seller can therefore be lower than the equity price, for example by the amount deposited in escrow.

See also: escrow account, net debt, closing.

Holdback

Polish: zatrzymanie części ceny

A holdback is the buyer’s contractual right to withhold part of the price for a set period as security for a downward price adjustment or claims against the seller. When the period ends, the buyer pays the amount held back less claims settled under the agreement, and may keep amounts matching claims made on time and still disputed until they are resolved. For the seller it is less secure than an escrow account, because the money stays with the buyer.

Independent expert

Polish: niezależny ekspert

An independent expert is a person or firm, named in the agreement or chosen under its rules, for example a certified public accountant or an accounting or advisory firm, that resolves disputed items in the post-closing price calculation. The agreement sets out the expert’s scope, deadlines, whether the findings are binding, and how the costs are shared. It may also limit the expert’s role to accounting matters and leave disputes over the meaning of the agreement to a court or an arbitral tribunal.

Leakage

Polish: wypływ / uszczuplenie wartości

Leakage is any transfer of value from the company to, or for the benefit of, the seller or its related parties between the locked box date and closing that the agreement does not permit. Examples include dividends, payments to shareholders above agreed compensation, waivers of debts owed to the company by the seller or its related parties, and payment by the company of the seller’s advisory fees. The agreement requires the seller to pay the buyer an amount equal to the leakage, sometimes grossed up for related tax.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

Locked box

Polish: mechanizm locked box

A locked box sets the price from the company’s financial information as of an agreed reference date, the locked box date, such as the last audited balance sheet date. If the deal closes, results from that date belong economically to the buyer, and the seller undertakes that no value will leak to it or its related parties before closing, other than permitted leakage. The price is not adjusted for changes in net debt or working capital, though the agreement may add a ticking fee and the buyer can recover leakage.

Not to be confused with: closing accounts.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

Locked box date

Polish: dzień locked box

The locked box date is the reference date of the financial information used to set the price in a locked box deal. From that date the economic results of the business are attributed to the buyer, although ownership of the shares passes only at closing. The period for which the seller is liable for leakage runs from the same date.

See also: locked box, leakage, ticking fee.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

Minimum operating cash

Polish: minimalna gotówka operacyjna

Minimum operating cash is the amount of cash the parties treat as necessary to run the company on the measurement date, for example cash in store registers or cash in transit. If the agreement carves it out, it does not reduce net debt, which lowers the equity price. The seller may then argue that the working capital peg already covers the company’s liquidity needs, so counting them in both places would cut the price twice for the same reason.

More in the article “Cash in the company’s price. Why a seller who fights over the operating minimum loses on the surplus”.

Net debt

Polish: dług netto

Net debt is a company’s financial debt, such as bank loans, other loans, and bonds, less its free cash. In the bridge from enterprise value to the equity price, positive net debt lowers the price and negative net debt raises it. The parties define it in the agreement, deciding among other things whether lease liabilities count as debt and which cash is free, restricted, or needed to run the business.

More in the article “Company debt before a sale. Too little costs you for years, too much costs you at the deal”.

Non-operating assets

Polish: aktywa nieoperacyjne

Non-operating assets are items of a company’s property that are not needed for its core business, so their value is assessed separately from the value of that business, such as an unused property, stakes in other companies unrelated to the core business, deposits above the cash needed for operations, or loans made to shareholders. A valuation based on EBITDA or cash flows does not capture them, provided the income and costs related to those assets, such as rent from a leased property or the upkeep of an unused building, are excluded from the earnings or cash flows used. In the bridge from enterprise value to equity value, their value is therefore added, or they are removed from the company before the deal. Care is needed not to count them twice, for example by treating excess cash both as part of net debt and as a non-operating asset. The parties must agree which assets they treat as non-operating and how to value them.

Notarial deposit

Polish: depozyt notarialny

A notarial deposit is money or securities that a Polish notary accepts for safekeeping in connection with a notarial act performed at the notary’s office, to be released to the person named when the deposit is made or that person’s legal successor. In a sale it can secure the price: the buyer pays the money into the deposit, and the notary releases it to the seller. The notary’s record of the deposit states, among other things, the planned release date and the recipient (Article 108, Polish Law on Notaries).

Not to be confused with: escrow account.

Permitted leakage

Polish: dozwolony wypływ / dozwolone uszczuplenie wartości

Permitted leakage is a set of transfers of value from the company to the seller or its related parties, listed in the agreement, that may be made between the locked box date and closing without having to be repaid. Examples include market-rate compensation already reflected in the valuation, or an agreed dividend that the buyer deducts from the price up front. The agreement specifies the types of transfer and their caps or the method for calculating them.

Purchase price adjustment

Polish: korekta ceny

A purchase price adjustment is a change to the preliminary price after closing, calculated under rules set in the agreement, for example from the difference between actual and estimated net debt and working capital at closing. The agreement states which party prepares the closing statement, how long the other party has to dispute it, and who resolves a dispute, for example an independent expert.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

Purchase price mechanism

Polish: mechanizm ustalania ceny

The purchase price mechanism is the set of provisions in a share purchase agreement that determines how the agreed valuation of a business becomes the price payable to the seller. It may cover the bridge from enterprise value to equity value, the choice between a locked box and closing accounts, and contingent payments such as an earnout. These provisions determine the amount paid at closing and any later payments and refunds.

More in the articles “Locked box or completion accounts. The same dispute, two different dates” and “Earn-out. How 40 percent of a company’s price disappears in the agreement’s definitions”.

Seller note

Polish: pożyczka sprzedającego

A seller note, also called a vendor loan, is seller financing of part of the price. The buyer incurs a debt to the seller for that part, documented in a separate loan agreement or note, and repays it after closing on an agreed schedule, usually with interest. It can help when the buyer lacks enough equity or full bank financing, for example in a management buyout. A bank lending to the buyer may require the seller note to be subordinated, which may restrict payments on it until the bank loan is repaid.

Stock consideration

Polish: zapłata udziałami lub akcjami

Stock consideration is payment of all or part of the price in shares of the buyer or its parent, in exchange for the shares sold. The seller becomes a shareholder of that company and is exposed to changes in the value of the shares received. The parties agree on the value of these shares and the exchange ratio, and the tax treatment depends on the structure, for example whether it meets the conditions for a tax-neutral share-for-share exchange.

Ticking fee

Polish: ticking fee

A ticking fee is an agreed addition to the price for the period from the locked box date to closing, when the company’s results already belong economically to the buyer but the seller has not been paid. It may be a fixed daily amount or interest on the price at an agreed rate. It compensates the seller for the value the company generates for the buyer in that period, or for the delay in receiving payment.

See also: locked box, locked box date, leakage.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

Transaction expenses

Polish: koszty transakcyjne spółki

Transaction expenses are costs of the sale borne by the target company, for example fees of the seller’s advisors or transaction bonuses for management. The agreement states whether amounts still unpaid at closing are deducted from the price as debt-like items or through a separate adjustment. In a locked box deal, the agreement usually treats payment of these costs by the company after the locked box date as leakage unless it allows it as permitted leakage.

More in the article “Company debt before a sale. Too little costs you for years, too much costs you at the deal”.

Working capital peg

Polish: docelowy / referencyjny poziom kapitału obrotowego

The working capital peg, also called the working capital target, is the level of net operating working capital, as defined in the agreement, that the company should show at closing. The parties set it, for example, from historical data adjusted for seasonality. In a closing accounts deal, working capital above the peg raises the price and a shortfall lowers it. Collecting receivables early or delaying supplier payments before closing therefore usually does not raise the price: net debt falls, but working capital falls by the same amount.

More in the article “Locked box or completion accounts. The same dispute, two different dates”.

If price settlement is an issue in your transaction, see the service page M&A Transactions (Mergers and Acquisitions).

Other sections of the glossary: Deal basics and types, Sale process and documents, Due diligence, Valuation, SPA and risk allocation, Shareholders and investor rights, Financial statements and metrics, Stock exchange, Corporate banking. Index of all entries: M&A and corporate finance glossary.