- About Us
- Products & Solutions
- Industry Solutions
- Global Capabilities
- Resources
- Contact Us
J.P. Morgan’s escrow services help to mitigate risk in a wide range of M&A transactions. Our solutions reduce the risks faced by both the buyer and the seller, and our M&A experts structure the escrow to ensure the deal closes quickly and securely.
| Buyer’s risks | Seller’s risks | Joint risks |
|---|---|---|
|
Validity of representations and warranties Compliance with non-compete covenants Retention of key staff whose value is part of the purchase price |
Buyer’s ability/willingness to purchase as agreed Performance-based adjustments – e.g., asset value vs. purchase price |
Regulatory approval/denial Unknown tax consequences associated with the deal |
Examples of escrow solutions for M&As
| Situation | Solution |
|---|---|
| A U.S. private equity fund is buying a private technology company and is concerned about the accuracy of the acquired company’s financials. | J.P. Morgan holds a percentage of the purchase price in escrow for up to 18 months. If, after 18 months, no claims are made, the funds are paid to the seller. |
| A large U.S. pharmaceutical company is purchasing a private biotech company and needs to pay the proceeds to 100 shareholders. | J.P. Morgan sends out the Letters of Transmittal (LTs), receives and holds the funds, and pays out the proceeds to shareholders upon the return of the LTs. |
| A large Chinese oil company is attempting to purchase a U.S. oil company. The U.S. company wants to ensure that the Chinese company is serious as a potential buyer. | J. P. Morgan holds a portion of the anticipated purchase price in escrow until the firm is qualified as a legitimate bidder. If the firm loses out in the bidding, the funds are returned. |
