During the LOI negotiation process, we were accused of "double-dipping" because we proposed a seller note###-###-#### % of purchase price) and, separately, an escrow hold-back (5% of purchase price) to protect against a potential R&W breach post-close. The seller note is not structured as a "forgivable" seller note. Furthermore, we proposed that, assuming no R&W breach, the amount held in escrow would be released to the seller after 12 months. Are we being unreasonable by proposing a structure that includes a seller note (with no attached contingencies) and a 5% escrow hold-back? Any guidance and/or color would be greatly appreciated. Also, does anyone know of a source that has data on the use of escrow hold-backs in the lower middle market? Thank you!
Escrow hold-back + seller note = no deal?
by a searcher from New York University - Leonard N. Stern School of Business
More on Searchfunder
Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
481 views
27 comments
Sign in to see all replies.
Create an account.