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Treasury and Payments

2022 M&A Holdback Escrow Study: Year-over-year trends and highlights

Gain a deeper understanding of M&A holdback escrows and how they are being used based on data from more than 2,600 transactions.


Corporate mergers and acquisitions. If you’re the buyer, the risks can be significant. Enter M&A holdback escrows: the risk mitigation tool that allows you as the buyer to retrieve funds should problems arise during a purchase.

Now, J.P. Morgan has gathered data from more than 2,600 transactions from over the past three years to produce the 2022 M&A Holdback Escrow Study. From end to end, it offers you an analysis of:

  • Trends and characteristics of M&A holdback escrows
  • Behavioral differences between financial and strategic counterparties
  • Insights into dispute resolution in the holdback escrow market
     

…due to market uncertainty, escrow continued to be heavily used by companies in need of extensive, flexible and low-cost claim coverage.

 

Are businesses like yours taking advantage of holdback escrows?

J.P. Morgan experienced a 7% increase in M&A escrow volume for the first half of 2022 versus the first half of 2021. So, what were the target sectors for M&A? Based on our data, here’s what we discovered:
 

 

Explore the claim facts

Covenant breaches. Post-closing purchase price adjustments. Pension underfunding issues. Unpaid taxes. Environmental liabilities. These are just a few of the risks that can be alleviated with escrow claim coverage. And it’s particularly important for you as the buyer seeking to mitigate risk during acquisition.

26%: Deals with at least one claim (indemnity, purchase price adjustment or expense)

 

75%: Claims received that were resolved in less than six months


85%: Resolved within 12 months - this resolution speed is faster on average than representations and warranties insurance1 

 

 


Contact our Escrow services professionals today for help with your M&A, debt capital markets financing, litigation and more.


Experience faster, more streamlined engagement, tracking and management of escrow accounts with our Escrow Direct online platform. 
 

1.Source: 4th National Forum on M&A, RWI and Transactional Risk Insurance: Claims Management and Handling for Reps and Warranties Insurance Presentation

 

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Notwithstanding anything to the contrary, the statements in this material are confidential and proprietary to JPMC and are not intended to be legally binding. Any products, services, terms or other matters described herein (other than in respect of confidentiality) are subject to, and superseded by, the terms of separate legally binding documentation and/or are subject to change without notice. J.P. Morgan is the marketing name for J.P. Morgan Payments business of JPMorgan Chase Bank, N.A. and its affiliates worldwide.

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© 2022 JPMorgan Chase & Co. All Rights Reserved.

Escrow Payments