DENMARK Law and Practice Contributed by: Dan Moalem, Jakob Skafte-Pedersen, Poul Guo and Thomas Enevoldsen, Moalem Weitemeyer
ments. The locked-box date is typically set several months prior to signing, with contractual protections in place to prevent value leakage. Completion Accounts Still Used in Bespoke or Bilateral Deals Completion accounts continue to be applied in certain transactions, particularly in bilateral deals or where there is a higher degree of valuation uncertainty. These structures allow for post-closing purchase price adjustments based on actual financial metrics, such as cash, debt, and working capital as of the closing date. Earn-Outs, Deferred Consideration and Roll-Over Equity Earn-out mechanisms and deferred consideration are used in the Danish private equity market, particu - larly in transactions where bridging a valuation gap is relevant or where continued involvement of key individuals post-closing is expected. This approach is typically seen in founder-led transactions, the lower- mid-market segment, or in deals involving ongoing operational roles for the sellers. Roll-over equity arrangements are more commonly applied and are typically used when a private equity seller retains a minority stake or when management reinvests alongside an incoming financial sponsor. Effect of Private Equity Involvement Private equity sellers generally prefer transaction structures that limit post-closing exposure, which contributes to the widespread use of locked-box pricing and W&I insurance. On the buy-side, private equity-backed purchasers may adopt more complex risk allocation structures, including elements such as seller financing or contingent payments, depending on the transaction context. 6.2 Locked-Box Consideration Structures Interest on Equity Price is Typical In Danish private equity transactions employing a locked-box structure, it is common practice to include a ticking fee or interest on the equity value to compensate the seller for the period between the locked-box date and completion. This interest is typ - ically expressed as a fixed daily rate or annualised
percentage and intends to reflect the earnings from the locked-box date to closing which earnings the buyer will retain by way of the locked-box. The spe - cific rate is negotiated between the parties and may vary depending on factors such as transaction size,
sector, and process dynamics. Reverse Interest on Leakage
Reverse interest on leakage, ie, compensation pay - able by the seller for any unauthorised value trans- fers from the target company during the locked-box period, is not widely used. Such leakage is instead typically reimbursed on a DKK-for-DKK basis. Negotiation Points Both ticking fees and the exact terms, including appli - cable rates, calculation periods, and definitions of permitted versus prohibited leakage, are frequently subject to negotiation. These elements are influenced by the relative bargaining positions of the parties, the availability of warranty and W&I insurance, the expect - ed duration for obtaining regulatory approvals (where relevant) and whether the transaction is conducted as a bilateral negotiation or through a competitive auc - tion process. 6.3 Dispute Resolution for Consideration Structures Expert Determination for Completion Accounts In Danish private equity transactions, it is standard market practice to include a dedicated dispute reso - lution mechanism for matters related to the calcula - tion of consideration. In deals based on a completion accounts structure, the parties typically agree that any disagreements concerning the determination of the closing accounts or related post-closing adjustments will be resolved by an independent expert. This expert is often a chartered accountant jointly appointed by the parties or designated by a professional or arbitral institution. Less Common in Locked-Box Structures In transactions structured with a locked-box mecha - nism, pricing disputes are generally less common due to the fixed nature of the purchase price. Here, the general dispute resolution venue is used and if a dis - pute relates to potential disagreements on, for exam - ple, leakage or the interpretation of permitted leakage
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