What is an escrow and what is a holdback?
In M&A transactions, there’s a lot of terms that you need to know. In this episode of Dealmaking with Laura DiFrancesco, Laura teaches you exactly what escrows and holdbacks are. Defining the terms, explaining the mechanics, and highlighting the importance of clarity in deal terms, emphasizing how negotiation leverage and risk management play significant roles in structuring these agreements. The episode wraps up with the resources you need for further understanding and insight into the legal aspects of buying a small business.
What You’ll Learn //
// Definition of Terms
Learn the definition of an escrow, a holdback, an escrow holdback. An escrow is when funds are held by a third party. A holdback is a portion of the purchase price withheld. And escrow holdbacks are controlled by a third party.
// Clarity of expectation
Defining expectations for all parties is crucial for all parties involved in an M&A transaction as the deal terms vary significantly based on each transaction and party involved.
// Importance of Resources
Negotiation leverage can greatly impact deal terms, it's important for each business to have different liabilities affecting escrows. Additionally, insurance must be considered in transactions. See the below resources to help you in your next transactions.
Episode Highlights:
00:00 Understanding Escrows and Holdbacks
02:14 The Importance of Clarity in Deal Terms
05:29 Negotiation Leverage and Its Impact
08:31 Risk Management in M&A Transactions
09:53 Dean Street Law
11:26 Final Thoughts and Resources
Resources MentionedEntrepreneurship Through Acquisition Waitlist // https://lauradifrancesco.co/eta-landing-pageShare Your Review + Get the Free Pre-LOI Due Diligence Request List // Email etareview@lauradifrancesco.coWhat is ETA // Ep 27 of Dealmaking with Laura DiFrancesco // https://www.youtube.com/watch?v=JKEtNE-HySA Waywine Winery and Vineyard // https://wayvine.wine/ For free legal guides and resources // https://deanstreetlaw.com/resources Unlock your legal roadmap to success with Acquisitions Insights // https://lauradifrancesco.co/acquisitioninsights Schedule your complimentary consultation with Dean Street Law today!https://www.deanstreetlaw.com/potential-client-questionnaire
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