What is escrow in an acquisition?
Escrow is a holdback of acquisition proceeds — commonly 10–15% for 12–18 months — held by a third party to cover breaches of the seller's representations and warranties discovered after close.
Escrows delay part of everyone's payout and are released absent claims. Representation-and-warranty insurance increasingly substitutes for large escrows in bigger deals.
Related:AcquisitionEarnout