---
title: "What Is Locked Box (UK)?"
term: "Locked Box (UK)"
description: "Locked box (UK) is a deal structure where the buyer pays a fixed price for equity as of a historical balance sheet date — the \"locked box\" — with the seller bearing economic risk until closing and strict rules on cash leakage."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/locked-box-uk
---

# What Is Locked Box (UK)?

> Locked box (UK) is a deal structure where the buyer pays a fixed price for equity as of a historical balance sheet date — the "locked box" — with the seller bearing economic risk until closing and strict rules on cash leakage.

**Locked box (UK)** is the European-flavored M&A price lock — value frozen at a past accounts date, with rules stopping the seller from draining cash before close.

## How it works

Parties agree a locked-box date (often last audited accounts). Purchase price equals equity value at that date plus agreed adjustments. From locked-box date to closing, the business belongs economically to the buyer except permitted leakage (salaries, ordinary dividends per policy). Seller warranties cover leakage and sometimes interim underperformance.

**Ticking fees** may compensate sellers for delayed close. Contrast with **completion accounts**, where price moves with closing balance sheet.

## Why it matters

- **Founders:** Leakage disputes are common — every dividend, related-party payment, and bonus needs clearance. Model net proceeds after leakage claims.
- **Investors:** Preferred holders care how locked-box price maps to waterfall vs earn-out alternatives.

Legal counsel on both sides drafts detailed permitted leakage schedules — including ordinary course salaries, pension contributions, and approved advisor fees. Anything outside the schedule requires buyer consent or price adjustment.

Disputes often center on management bonuses declared between locked-box date and close — negotiate bonus policy upfront.

## Common mistake

Treating locked-box price as guaranteed cash at signing. Leakage breaches and escrow holdbacks can claw back proceeds.

## Practical takeaway

In locked-box deals, operational discipline between sign and close matters as much as price. Founders should freeze unusual payments and run leakage checks with counsel weekly until the wire lands.

## Related ideas

- [Locked-Box](/glossary/locked-box)
- Completion accounts and working capital peg
- Leakage covenant and warranties

## FAQ

### What is Locked Box (UK) in simple terms?

In a UK locked-box deal, price is fixed based on accounts at a past date. The seller keeps running the business until close but cannot extract value ("leakage") except permitted items. Buyer receives upside from locked-box date onward.

### Why does Locked Box (UK) matter?

Founders selling to UK or European buyers may see locked-box term sheets. Understand leakage baskets, interest on deferred consideration, and seller warranties on interim performance.


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Source: https://venturecapitaltracker.com/glossary/locked-box-uk