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Between the enterprise value announced and the equity value received, four mechanisms are negotiated: net debt and debt-like items, normalised working capital, maintenance capital expenditure and EBITDA adjustments, then the choice between a locked box and completion accounts.
25 September 2026 · 8 min read · By MGI BFC
"I was offered 10 million dinars for my company." Three months later the seller banks 7.4. Nothing improper happened: no one had explained what separates the headline price from the amount actually received.
A buyer thinks in enterprise value, the worth of the business irrespective of how it is financed. That is the figure that circulates and sticks in memory. What the seller receives at signing is equity value, once what the company owes has been deducted and what it delivers has been adjusted. Four mechanisms sit between the two. None of them is a buyer's trick; each answers a logic. But they are prepared in advance, never improvised at the table.
In millions of Tunisian dinars. The price loses 26% between the letter of intent and the wire transfer, with neither party acting in bad faith.
The multiple does not apply to reported earnings but to a normalised figure: what a buyer will actually find the following year. Usual adjustments cover non-recurring items, the owner's remuneration restated to a market level for the role actually performed, related-party transactions on non-market terms, rent on premises owned by the seller, personal expenses borne by the company, and the full-year effect of a contract won or lost during the year.
This is the most valuable line of the whole negotiation, in both directions: an adjustment of 100 thousand dinars accepted on a multiple of 6 is worth 600 thousand dinars of price. It has to be evidenced, though. An invoice, a contract, minutes or a certificate: without a document it will not be accepted.
One limit that is often misunderstood: income that does not appear in the accounts cannot be adjusted for. No buyer pays a multiple on revenue it can neither verify nor reproduce, and raising it moves the discussion straight to tax exposure.
Bank loans, overdrafts and short-term facilities, finance lease and lease liabilities, shareholder current accounts and accrued interest are deducted; available cash and readily realisable investments are added.
The negotiation is not about those obvious items. It is about everything that behaves like debt without carrying the name: dividends declared and unpaid at the reference date, unfunded employee liabilities such as end-of-service indemnities and accrued leave, overdue tax and social security liabilities with their payment plans and penalties, litigation unprovided or under-provided, factoring and receivables discounting, signed but undisbursed capital expenditure commitments, and supplier payment delays treated as disguised financing.
The reverse also applies: not all cash is available. A buyer excludes pledged deposits and escrow balances, minimum balances imposed by a credit agreement, cash held in a subsidiary whose upstreaming requires a minority shareholder's consent, cash subject to transfer restrictions, and period-end collections matched by supplier invoices already due.
The price implicitly assumes the company is delivered with the working capital its normal operations require. If working capital at the reference date is below its usual level, collections were accelerated or payments delayed: the buyer will have to rebuild that gap out of its own cash, and deducts it from the price. The reverse holds, provided "normal" was defined before signing.
A defensible normalised level requires four decisions: the period, generally a twelve-month rolling average and longer where the business is seasonal; cleaning the base of non-recurring items such as an exceptional receivable, a supplier dispute, non-moving stock or factoring introduced mid-year; the perimeter, stating clearly what belongs to working capital and what belongs to net debt so that no item is counted twice; and the formula itself, annexed to the agreement line by line with a worked example on a past date.
The most common post-completion dispute arises from a normalised working capital definition drafted in a single sentence.
A company whose asset base is ageing mechanically reports more profit in the short term, and buyers know it. Fully depreciated machines still in service whose replacement has been deferred, heavy maintenance postponed, compliance upgrades not undertaken, end-of-life IT, vehicles beyond their useful life: that catch-up is quantified and deducted. A well-advised seller documents it first, with a schedule, rather than letting the other side estimate it.
Under a locked box, the price is fixed once and for all on a historical reference balance sheet at a past date, with no post-completion adjustment. The seller warrants that no value has left the company between that date and completion, which is the leakage clause; an exhaustive list of permitted leakage is annexed to the agreement, and interest is paid to the seller for the intervening period, since the business generated returns for the buyer's account.
Under completion accounts, the price is provisional at signing and then adjusted from accounts drawn up at completion, on actual net debt and working capital. The agreement must state who prepares them, under which accounting policies, within what timetable, and how an independent expert will determine contested items.
| Criterion | Locked box | Completion accounts |
|---|---|---|
| Price certainty | Complete from signing | Known after completion |
| Earnings between the two dates | For the buyer | For the seller |
| Work after the deal | None | Accounts, review, possible expert determination |
| Dispute risk | Low | Real, concentrated on working capital |
| Condition for success | Reliable, recent reference accounts | Precisely drafted definitions |
A locked box requires reference accounts the buyer trusts, which is exactly what a vendor-side due diligence run early produces.
A prepared file shortens due diligence, and short due diligence protects the price.
MGI BFC prepares EBITDA adjustments, net debt and normalised working capital, drafts the definitions to be carried into the agreement, and supports sellers and buyers through due diligence. See our transaction advisory services and our index of sector valuation multiples in Tunisia.
General information prepared by the Transaction Advisory Services team at MGI BFC. It describes market practice and is not advice: every deal calls for its own contractual definitions.