M&A Escrow Agreements: Negotiation & Drafting Strategies

Structuring Contract Terms, Dealing With Escrow Agents, Avoiding Conflicts With Acquisition Agreements

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Wednesday, March 11, 2015

Recorded event now available

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Course Materials

This CLE course will guide deal counsel in negotiating and drafting escrow agreements in M&A transactions. The panel will examine how the current regulatory landscape for financial institutions is impacting escrows, critical terms in escrow agreements, key considerations when dealing with escrow agents responsible for managing and maintaining the escrow account, and strategies to avoid creating agreement provisions that conflict with the acquisition agreement.

Description

Escrow accounts are frequently used in private M&A transactions to hold back a portion of the sale proceeds until the terms of the acquisition agreement are met. Increased regulatory scrutiny of financial institutions, including escalating restrictions and capitalization requirements for bank balance sheets, will have a significant impact on how and, potentially, where escrows are managed in the future.

Holdback escrows have benefits for both buyers and sellers—they protect buyers against false representations and warranties and limit the sellers’ liability to the portion of the escrow funds that are earmarked for damages.

Deal parties establishing an escrow account must negotiate an escrow agreement with an escrow agent outlining the account’s terms and conditions and the agent’s duties and expectations. Key terms of the escrow agreement include scope, representations and warranties, and management of the escrow funds. The escrow agreement must be strategically negotiated and drafted to avoid conflicting with provisions of the acquisition agreement.

Listen as our authoritative panel explains considerations for negotiating and drafting escrow agreements in M&A transactions and tactics for avoiding pitfalls when working with escrow agents.

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Outline

  1. Current trends in the use of escrow agreements in M&A transactions
  2. Key provisions in escrow agreements
    1. Scope
    2. Representations and warranties
    3. Limitations on liability
    4. Agent management of escrow funds
    5. Indemnities for third-party costs
  3. Considerations in drafting and negotiating escrow agreements

Benefits

The panel will review these and other key issues:

  • How will the changing regulatory landscape financial institutions are facing impact decisions on how and where escrows are managed in the future?
  • What are some of the pitfalls to look out for when negotiating M&A escrow agreements?
  • What key terms should be carefully negotiated in escrow agreements?
  • What are some best practices for parties and their counsel for working with the escrow agent?

Faculty

Colindres, George
George Colindres
Partner
Perkins Coie

Mr. Colindres' corporate governance practice focuses on emerging companies and venture capital, including entity...  |  Read More

Paul Koenig
Paul Koenig
Managing Director
Shareholder Representative Services

As Co-Founder of Shareholder Representative Services, Mr. Koenig manages operations and heads the...  |  Read More

Alex Tsarnas
Alex Tsarnas
Managing Director - Global Business Development
SRS|Acquiom

Mr. Tsarnas oversees the strategic development for his firm, leveraging its market leadership as the post-closing...  |  Read More

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