Mergers & Acquisitions ('M&A') Escrow

M&A: Cross-Border Transaction Escrow

M&A: Warranties Holdback Escrow

When buying or selling businesses, there will frequently be a shortage of time. The due diligence exercise is designed to give the purchasing party as much information about the acquisition target as possible, but there is a limit to the amount of time and resource that can be spent on due diligence.

Often, then, lawyers for the purchasing party will seek to 'bridge the gap' with warranties and representations. Although those will give the purchasing party some recourse, it could be that the seller is based overseas; is a private individual who fully intends to spend their exit proceeds or whose creditworthiness is otherwise in question.

This is when the deployment of an escrow can help enormously - in a 'holdback' situation, a portion of the purchase funds are paid not to the seller, but to an escrow agent instead, who holds them until certain conditions are met. This way, in the event that the purchase conditions are not met by an agreed deadline, the purchasing party can recover the relevant amount from the escrow agent instead, and doesn't have to take a credit or jurisdiction risk on the seller.

M&A: Earn-Out Escrow

M&A: Good Faith Escrow

M&A: Takeover Code Escrow

M&A: Paying Agent Escrow

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