Completion Accounts Process in France: Step‑by‑step Purchase‑price Adjustment Guide

The completion accounts process in France is the post‑closing mechanism through which buyers and sellers of a business reconcile the actual financial position of a target company on the day ownership changes hands and adjust the purchase price accordingly. It affects every party to a share or asset deal, private‑equity sponsors, corporate acquirers, founders exiting a business, CFOs managing the target’s finance function, and the M&A counsel who must draft and then operate the adjustment clauses. With France’s enhanced foreign‑direct‑investment (FDI) screening rules and recent Finance Act changes continuing to reshape deal execution through 2026, mastering the procedural sequence, documentation requirements and dispute‑resolution steps has become more critical than ever.

Overview of the Completion Accounts Process and Who It Applies To

In French M&A practice, parties typically choose between two price‑adjustment models: a locked‑box mechanism, which fixes the price by reference to a set of historical accounts and prohibits value leakage between the locked‑box date and closing; and completion accounts, which defer the final price calculation until a balance sheet and profit‑and‑loss account are prepared as at the actual completion date. Completion accounts in France are the preferred approach whenever the target’s working capital or net debt position is expected to fluctuate materially between signing and closing, or when the parties cannot agree on a reliable locked‑box date.

The mechanism applies equally to share deals (cession de parts sociales or cession d’actions) and asset deals (cession de fonds de commerce), although the specific schedules and tax treatment differ. For listed targets subject to oversight by the Autorité des marchés financiers (AMF), additional disclosure obligations may affect timing. Private deals are governed primarily by the share‑purchase agreement (SPA) itself, with French accounting standards set by the Autorité des normes comptables (ANC), or IFRS where the target reports under international standards, underpinning the accounting policies applied.

When parties choose completion accounts

• Volatile working capital. Seasonal businesses, companies with long payment cycles, or targets undergoing restructuring.
• Significant net‑debt fluctuation. Leveraged targets where debt is being refinanced at or around closing.
• Extended gap between signing and closing. Deals requiring regulatory clearances, including FDI screening, that make a locked‑box date unreliable.
• Buyer insistence on post‑closing verification. PE sponsors and trade buyers who want access to books before final settlement.

Who this guide serves

This step‑by‑step guide is designed for corporate buyers, private‑equity sponsors, vendor shareholders, CFOs of target companies, and M&A counsel who need a practical roadmap, from contractual setup through to final settlement, for the purchase price adjustment process in France.

Eligibility and Prerequisites for the Completion Accounts Process in France

Any transaction where the SPA or asset‑purchase agreement (APA) includes a price‑adjustment clause referencing accounts drawn up as at the completion date is eligible for the completion accounts mechanism. There is no statutory requirement to use completion accounts; the choice is purely contractual. However, certain prerequisites must be settled in the SPA before closing if the process is to run smoothly.

Key negotiation points to settle pre‑closing

• Accounting policies schedule. The SPA must specify which accounting framework applies, French GAAP per ANC rules, or IFRS, and list any departures from the target’s historical policies (e.g., revenue recognition cut‑offs, provisioning methodologies).
• Definitions of working capital and net debt. Precise, line‑item definitions avoid disputes. Industry observers expect that ambiguity in these definitions remains the single largest source of post‑closing disagreement.
• Target or reference working capital. A normalised working‑capital figure against which the completion‑date position will be compared.
• Materiality and de minimis thresholds. Agreed levels below which adjustments are disregarded.
• Escrow or holdback amount and release conditions. Typically negotiated as a percentage of the purchase price, held pending final determination.
• Independent expert appointment mechanism. The SPA should name the expert, or prescribe how one is selected (e.g., by the president of the Ordre des Experts‑Comptables) and specify that the determination is final and binding.
• Regulatory prerequisites. Where FDI screening by the Ministry of Economy applies, or where AMF clearance is needed for listed targets, the SPA should address how regulatory timelines interact with the completion‑accounts calendar.

The party that prepares the draft completion accounts is almost always the buyer, or, more precisely, the buyer’s appointed accounting team, because the buyer controls the target’s books from the completion date onward.

Step‑by‑Step Completion Accounts Procedure

The following seven steps describe the standard completion accounts procedure used in French M&A transactions, from contractual setup to post‑adjustment filings. The compact table below summarises the key actors and typical durations before each step is explained in detail.

Step 1, Contractual setup: SPA schedules, definitions and escrow

Before completion, the parties negotiate and attach to the SPA the detailed schedules that will govern the entire adjustment process. These include the accounting policies schedule, a worked example of the true‑up calculation (even if illustrative and non‑binding), definitions of each adjustment item (working capital, net debt, cash, capex if relevant), and the escrow or holdback instrument.

The escrow and holdback mechanism in France is typically documented either through a séquestre arrangement held by a notary, a bank escrow, or a law‑firm‑administered escrow. The SPA will specify the amount to be withheld, market practice generally ranges from 2% to 10% of the purchase price, and the conditions under which it can be released. In deals involving FDI screening, the escrow release matrix increasingly includes a condition precedent tied to obtaining or maintaining the foreign investment clearance issued by the Ministry of Economy.

Deliverable at this stage: a signed SPA with a completion accounts schedule, an executed escrow or holdback agreement, and agreed accounting policies that will bind both parties during the post‑closing process.

Step 2, Completion and transfer mechanics

On the completion date (date de réalisation), ownership of the shares or assets transfers and the buyer pays the initial purchase price (often called the “estimated price” or “provisional price”). At the same moment, the target’s finance team, now under the buyer’s control, takes a financial snapshot: bank balances are confirmed with each bank, outstanding debt positions are noted, inventory is counted or valued, and working‑capital line items (receivables, payables, accruals) are frozen for accounting purposes.

This snapshot forms the raw data from which the draft completion accounts will be prepared. In practice, the buyer’s deal team and the target’s CFO or financial controller should agree a detailed closing checklist in the days leading up to completion to ensure that every data point needed for the calculation mechanics is captured accurately at the cut‑off.

Deliverable: a completion‑date accounting snapshot comprising bank confirmations, debt position statements, and working‑capital schedules as at the close of business on the completion date.

Step 3, Preparation of draft completion accounts

The buyer (or the buyer’s appointed accounting firm) prepares the draft completion accounts within the timeframe specified in the SPA, most commonly 30 calendar days from the completion date. These draft accounts comprise a balance sheet and a profit‑and‑loss account drawn up to the completion date, applying the accounting policies agreed in the SPA schedules.

The draft must be accompanied by detailed supporting schedules: a line‑by‑line working capital build‑up, a net debt reconciliation, a cash reconciliation to bank statements, and notes explaining any adjustments made (e.g., provisions, accruals, deferred revenue). French accounting standards issued by the ANC govern the recognition and measurement principles unless the parties have expressly adopted IFRS for the purposes of the completion accounts.

The draft is delivered to the seller in both electronic (Excel and PDF) and, where required by the SPA, hard‑copy format. Crucially, the draft must include the buyer’s calculation of the purchase price adjustment, showing the difference between actual working capital and the target working capital, actual net debt and estimated net debt, and any other agreed adjustment items, so that the seller can see clearly whether the adjustment results in an upward or downward movement of the final price.

Step 4, Seller review and queries

Once the draft completion accounts are delivered, the seller has a contractually defined review period, typically 10 to 20 days, during which it may examine the accounts, request supporting documentation, and raise written queries or objections. The SPA usually requires the buyer to grant the seller and its advisors reasonable access to the target’s books, records and finance team during this period.

The seller’s queries should be specific and itemised: identifying each line item in dispute, the quantum of the disagreement, the accounting principle allegedly mis‑applied, and the seller’s proposed alternative figure. Vague or blanket objections risk being treated as non‑compliant under a well‑drafted SPA, potentially triggering deemed acceptance of the buyer’s draft.

Step 5, Accounting meeting and escalation to independent expert

If the seller raises valid queries, the parties will typically hold an accounting meeting, a face‑to‑face or virtual session attended by the respective accounting teams and, often, legal counsel, to attempt to resolve the disputed items. This negotiation phase normally lasts 7 to 10 days.

Items that remain unresolved after the accounting meeting are referred to an independent accountant or expert for final determination. The SPA should specify who the independent expert is (often a partner at a “Big Four” or mid‑tier accounting firm not conflicted on the deal) or prescribe how one is appointed, for example, by the president of the Ordre des Experts‑Comptables. French market practice, and the likely practical effect of most SPA drafting, is that the expert’s determination is contractually stated to be final and binding on both parties, absent manifest error.

The expert reviews the disputed items only (not the entirety of the completion accounts), applies the agreed accounting policies, and issues a written determination. The determination typically takes 30 to 60 days from the date of referral, depending on deal complexity. The expert’s fees are usually allocated to the losing party, or split proportionally based on how close each party’s position was to the expert’s final figure, the SPA should specify the allocation method.

This step is central to price adjustment dispute resolution in France. Parties should note that an expert determination is not an arbitration: it does not produce an enforceable award under the French Code of Civil Procedure but is enforced as a contractual obligation. Where a party believes the expert has exceeded the scope of its mandate or committed a manifest error, limited recourse may lie before the French courts.

Step 6, Final true‑up and escrow release

Once the completion accounts are finalised, either by agreement between the parties or following the expert’s determination, the final purchase price is calculated. The true‑up formula typically operates as follows:

Final Price = Estimated Price + (Actual Working Capital − Target Working Capital) − (Actual Net Debt − Estimated Net Debt) ± other agreed adjustments.

If the final price exceeds the estimated price already paid, the buyer pays the shortfall to the seller. If the final price is lower, the seller refunds the overpayment, or the escrow agent releases the appropriate portion of the escrow to the buyer and returns the balance to the seller. Payment is typically due within 5 business days of the final determination. The SPA should specify the interest rate applicable to any adjustment amount (commonly Euribor plus a margin, or the French statutory interest rate) from the completion date to the date of payment.

Step 7, Post‑adjustment accounting and tax filings

After settlement, both buyer and seller must record the adjustment in their respective accounts. For French corporate income tax purposes, price adjustments are generally treated as a modification to the acquisition cost of the shares or assets. Where the deal involves an asset purchase (cession de fonds de commerce), the adjustment may also affect the base for droits d’enregistrement (registration duties). Both parties should consult their tax advisors to ensure correct reporting and to address any withholding obligations that may apply in cross‑border transactions.

Documents Needed for Completion Accounts

The preparation and review of completion accounts requires a structured set of documents. The table below serves as a completion accounts checklist, listing each document, its issuer, recommended format and practical notes.

Each document should be prepared contemporaneously with the completion date snapshot wherever possible. Delays in obtaining bank confirmations or lender letters are a frequent cause of missed draft‑delivery deadlines. Parties should agree during SPA negotiation which documents will be provided by the target (and hence under the buyer’s control post‑closing) and which the seller must procure, particularly in relation to historical tax positions and related‑party information.

Industry observers expect that in transactions where the target maintains its accounts under French GAAP per ANC standards, the accounting policies schedule attached to the SPA should explicitly address areas where ANC guidance permits optionality, such as provisioning for doubtful receivables, valuation of work‑in‑progress, and treatment of operating leases, to prevent disagreements during the review phase.

Post‑Closing Adjustment Timeline and Key Deadlines

The overall post‑closing adjustment timeline in a French M&A deal typically spans 60 to 120 days from completion, depending on whether the parties can agree on the accounts or an independent expert must be appointed. The table below sets out a representative calendar. Note that the exact durations are contractual, the SPA governs, and variations are common (some deals use 45 or 60 days for draft preparation, while others compress the seller review period to 10 days).

How long does the process take overall? If the parties agree during the review phase, settlement can occur within 60 days of completion. Where expert determination is required, 90 to 120 days is typical. Complex, multi‑jurisdictional deals or those involving regulatory conditions may take longer. Parties negotiating the SPA should build these timelines into their cash‑flow planning and ensure that escrow arrangements remain in place for the full potential duration.

Costs, Fees, and Tax Considerations

Escrow vs holdback, structural differences

An escrow involves depositing a portion of the purchase price with a third‑party agent (bank, notary or law firm) who releases funds only upon satisfaction of defined conditions. A holdback means the buyer simply retains part of the price on its own balance sheet. Escrows provide greater certainty for the seller (funds are ring‑fenced) but incur agent fees. Holdbacks are cheaper but expose the seller to the buyer’s credit risk. In French practice, escrow is more common in mid‑market and PE‑backed transactions.

Tax consequences

For share deals, the purchase price adjustment generally modifies the buyer’s acquisition cost for corporate income tax purposes. For asset deals, a change in the price may affect the base for droits d’enregistrement (registration duties) and potentially VAT where the transfer does not qualify for the going‑concern exemption. Parties should review the applicable rules on the Direction Générale des Finances Publiques portal and take advice on any cross‑border withholding implications.

What Changes in 2026: FDI, Regulatory and Tax Developments

France’s FDI screening regime, administered by the Ministry of Economy, has been progressively strengthened since 2024. The scope of sectors subject to prior authorisation has expanded, and enforcement activity has increased. Early indications suggest that regulators are scrutinising post‑closing mechanics, including escrow release conditions, more closely where a foreign buyer is involved. The practical consequence for the completion accounts process in France is that SPAs increasingly include conditional escrow release clauses tied to the maintenance or confirmation of FDI clearance during the post‑closing period.

For listed targets, AMF disclosure requirements may impose additional timing constraints on when completion‑account information can be shared or published. Sellers and buyers of listed companies should factor AMF notification obligations into the post‑closing adjustment timetable.

On the tax side, Finance Act measures have reinforced the administration’s ability to challenge the tax treatment of price adjustments that it considers to be disguised payments. Parties should ensure that each component of the adjustment (working capital, net debt, earn‑out if applicable) is clearly identified and supported by the completion accounts schedules, reducing the risk of reclassification.

Common Pitfalls and How to Avoid Them

• Ambiguous accounting policies. Failing to attach a detailed accounting policies schedule to the SPA leaves room for the buyer to apply policies that favour a downward adjustment. Mitigation: negotiate and annex policies before signing.
• Undefined working capital. Using a vague definition (e.g., “current assets minus current liabilities”) without specifying included and excluded line items. Mitigation: list every balance‑sheet line item included, with examples.
• Unrealistic draft‑delivery deadlines. Setting a 15‑day deadline when the target has complex, multi‑entity books. Mitigation: align the deadline with the target’s reporting cycle and accounting resources.
• Non‑binding sample calculations. Including a worked example marked “illustrative only” that is later used to argue an alternative methodology. Mitigation: label the example clearly and state whether it is binding or indicative.
• No pre‑agreed expert appointment process. Leaving the choice of independent accountant to be agreed post‑dispute, which delays resolution. Mitigation: name the expert in the SPA or designate the appointing authority.
• Escrow triggers tied to unrelated covenants. Linking escrow release to warranty claims, regulatory approvals and completion accounts in a single release matrix. Mitigation: use separate escrow tranches or clearly separate the release conditions.
• Ignoring tax implications of adjustments. Treating adjustments purely as commercial items without assessing registration duty, VAT or withholding consequences. Mitigation: involve tax advisors from SPA drafting stage.
• Failing to account for FDI clearance timelines. Assuming FDI screening will be complete before the completion‑accounts process begins. Mitigation: build FDI conditionality into the escrow release conditions and extend deadlines if necessary.
• Inadequate record‑keeping at completion date. Not conducting physical inventory counts or obtaining same‑day bank confirmations. Mitigation: prepare a detailed closing‑day checklist and assign responsibilities in advance.
• Deemed acceptance clauses overlooked. Sellers who miss the query deadline may find the buyer’s draft is deemed accepted. Mitigation: diarise every SPA deadline immediately upon closing and allocate advisor resource in advance.

Sources

1. Legifrance, Code de commerce (French Commercial Code)
2. Autorité des normes comptables (ANC)
3. Ordre des Experts‑Comptables
4. Autorité des marchés financiers (AMF)
5. Ministère de l’Économie, FDI screening guidance
6. Direction Générale des Finances Publiques
7. IFRS Foundation