Escrow Services

Mergers & Acquisitions Escrow

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.

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