M&A Foundations · glossary
In a locked box deal, leakage is value flowing out of the target to the seller or its connected persons after the locked box date — dividends, fees, assets transferred at an undervalue. The seller must repay it euro for euro. Permitted leakage is the agreed exception list: payments everyone knows about and has priced, such as ordinary salaries or a disclosed management charge. SPA definition · Chapter 9
Explained in Chapter 9, Price Mechanisms and Adjustments, of M&A Foundations.
any of the following occurring in the period from (but excluding) the Locked Box Date to (and including) the Completion Date, other than Permitted Leakage: (a)any dividend or other distribution (in cash or in kind) declared, paid or made by any Group Company to or for the benefit of the Seller or any Related Person; (b)any payment by any Group Company to or for the benefit of the Seller or any Related Person, including any management, monitoring, service or directors’ fees; (c)any transfer of assets by any Group Company to, or assumption of liabilities of, the Seller or any Related Person, in each case at an undervalue; (d)any waiver or release by any Group Company of any amount owed to it…Read the definition in the document →
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