Shoot The Moon

Deal Mechanisms You’ve Never Heard of but You Might Deal With

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EPISODE 232:

Lockboxes promise price certainty—but the clock can quietly shift value. In this episode, Mike and Ryan break down how a lockbox differs from a classic cash-free debt-free (CF/DF) deal: fixed price as of a “lockbox date,” no post-close true-up, and a tight definition of permitted vs. non-permitted leakage. They discuss when lockboxes shine (fast closings, cleaner accounting, fewer surprises) and where sellers need to be careful (growth between lockbox date and close often accrues to the buyer). You’ll get apples-to-apples comparison tips for evaluating offers, what to watch in tax escrows, and a practical way to translate excess working capital into headline price. If you’ve ever wrestled with working capital adjustments or wanted a cleaner close, this one’s your field guide.

Seller checklist:

  • Nail down the lockbox date and permitted leakage list.
  • Quantify excess working capital and reflect it in price.
  • Set a close timeline—faster is safer for sellers.
  • Align on tax items and escrow triggers.
  • Ensure every CF/DF vs. lockbox offer is compared on the same basis.

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    RELATED EPISODES: 

    Episode 154: What will be your take home portion of the deal? Listen now >>

    Episode 123: Understanding Cash Free Debt Free in M&A Transactions. Listen now >>

    Episode 100: Looking back at 100 Episodes and Narrowing in on Working Capital. Listen now >>

    Episode 94: Navigating Undisclosed Liabilities Before, During, and After Close. Listen now >>

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