Completion accounts: net assets adjustment: share purchase agreement

by Practical Law Corporate , with thanks to Kathryn Cearns OBE, a non-executive director and expert in financial reporting, audit and governance

Standard clauses providing a framework for a post-completion purchase price adjustment in a share purchase agreement (SPA), based on the net assets of the target company. They establish a mechanism where a provisional purchase price, the Completion Payment, is paid at closing and later adjusted based on the target's net assets as shown in completion accounts. The clauses include a detailed schedule outlining the process for preparing, reviewing and agreeing the completion accounts and resulting price adjustment. The drafting addresses the hierarchy of accounting principles for drawing up the completion accounts, including specific policies for subjective items, and sets out timetables for the preparation and review of the draft documents.