Escrow company for closing a deal

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February 19, 2021

by a searcher from Carnegie Mellon University - Tepper School of Business in San Jose, CA, USA

Is it common to use an escrow company in closing a deal? What are the common scenarios when you should use or not use an escrow company?

For those who selected an escrow company in closing, what are the important criteria in selecting the right one?

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Reply by a professional
from Marquette University in Kirkland, WA, USA
There are a lot of good reasons to use an escrow company to close a deal. Banks often require it as they want an independent office handling the money. Escrow firms are also known to be (or should be) meticulous in getting the details done, doing lien checks, making the proper filings, making sure any transition fees and taxes (not income tax0 are paid, etc. Criteria: make sure they've done buy-sell deals, many of them. Banks usually have a preferred list.
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Reply by a searcher
from University of Pennsylvania in Dubai - United Arab Emirates
there are many reasons for using escrow services apart from the points raised above which are primarily focused on the closing process. We also use escrow to handle contingent payments such as those tied to conditions subsequent, earn-outs or triggered payments (e.g. customer consents, tax authority clearance).
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