Definition
Escrow
Portion of purchase price held by a third party post-close to backstop seller indemnities.
A typical escrow is 5–15% of consideration, held for 12–24 months, releasing automatically barring a claim. Escrow is the simplest form of holdback; alternatives include the deferred-consideration note and rep-and-warranty insurance, which lets the seller take more cash at close in exchange for the buyer paying a premium to an insurer.
See also
Read further in The Guide
Escrow and Holdback Mechanics
Sizing, duration, release schedules, and dispute mechanics for escrows and holdbacks — and how RWI insurance has shifted the negotiation.
Reps & Warranties Insurance Explained
How W&I/RWI insurance actually prices and pays out, where it genuinely de-risks a deal, and the underwriting exclusions buyers consistently underestimate.