DealLawyers.com Blog

October 6, 2009

Study: M&A Holdback Escrows

If you are among the many practioners who spend most of their lives doing small private company M&A deals with escrows rather than large cap public company M&A, you many be interested in a new JPMorgan study relating to holdback escrow accounts used in deals. In addition to analyzing various factors in the claims process and to provide information on year-over-year trends, the report looks at the percentage of escrows that have claims filed against the account; the types of claims; the average life span of the escrows and more.

Key findings in the report include:

– Of the deals analyzed, 40% had claims filed against the escrow.
– Of the escrows with claims presented by the buyer, some portion of the claim was paid in virtually all cases.
– The incidence of claims increased significantly from 2007 to 2008, which may be a reflection of the past year’s economic environment.