Selecting an escrow agent: M&A attorneys weigh in

Keep these factors in mind when engaging an escrow agent to meet the needs of your transaction.

Tags: Best practices, M&A, Escrow
Published: July 11, 2019

Many merger and acquisition (M&A) transactions require an escrow for indemnity claims, working capital and purchase price adjustments. At U.S. Bank, we have experience working with M&A attorneys in closing more than 1,000 escrows each year. Based on our extensive discussions, we’ve gathered their primary considerations in choosing the right escrow agent.


Responsive and timely KYC processing

A responsive provider is critical when it comes to meeting stringent deal deadlines. The escrow provider should have a comprehensive but streamlined onboarding process, saving time for all involved. An efficient partner must immediately engage both the parties and their counsel to articulate, collect and process required information, and respond to issues or questions that arise.


Experienced document review

Escrow agreements and paying or exchange agent documents are important pieces of M&A deals. While deal lawyers have many responsibilities to manage, they need to be confident in the agent reviewing drafts. The agent should understand the deal and have extensive experience reviewing such agreements. They should also be able to spot issues or negotiate possible sticking points. Most importantly, the agent must be easily accessible and able to provide comments quickly. A service partner that uses standardized templates can often negotiate these ancillary documents more efficiently.


An established provider should have experience in an array of situations and know how to overcome obstacles as they arise, whether working on unconventional matters or commonplace transactions.


Counsel looks for an escrow agent that offers flexible solutions tailored to the transaction’s unique needs. The provider must be available to participate in pre-closing conference calls, as needed, and react quickly to changing deal logistics. It’s also crucial an escrow agent employs backup professionals and specialized staff necessary for complex and larger deals (i.e., cash and stock escrows and consideration payments). Attorneys require an escrow agent that acts as a proactive and collaborative teammate in getting transactions closed as efficiently as possible.


Comprehensive support and specialized resources

M&A lawyers often prefer a full-service escrow agent that also provides paying and exchange agent services. Receiving complete transaction support in one place is critical. This includes industry-tested documentation, administrative expertise, tax reporting, data reconciliation and customized reporting generated in multiple formats, such as XLS and PDF. Dedicated escrow relationship managers and a specialized M&A paying and exchange agent team make this possible. A collaborative team working with customers and counsel, both before and after closing, to report, troubleshoot and resolve any payment obstacles will minimize payment concerns.


Extensive transactional expertise

Each escrow transaction has unique requirements based on the type of deal, documentation necessities, timeline and parties involved. It is important to attorneys that an escrow agent has experience administering a variety of transactions, such as:

  • Stock and asset acquisitions
  • Potential interplay among multiple escrow accounts
  • Use of stock in an escrow or payment of consideration
  • Earn-out payments
  • Litigation or regulatory disputes and settlements
  • Matters in distress or bankruptcy

An established provider should have experience in an array of situations and know how to overcome obstacles as they arise, whether working on unconventional matters or commonplace transactions.

At U.S. Bank, we understand an escrow agent will either intensify or ease an attorney’s time and effort and also has the potential to make or break a transaction. We provide responsive, flexible and collaborative escrow agents with comprehensive knowledge and resources to ensure a successful experience for counsel and their clients.


Click here to learn more about the escrow services offered at U.S. Bank.