Search
 

M&A Escrow Options After MMF Reform

How last Octobers changes to money market regulations are affecting mergers and acquisitions.

By Alex Tsarnas | Updated on January 03, 2017
Too often, corporate treasury professionals are brought to the table late in merger and acquisition (M&A) transactions. While parties to the deal are focused on tense negotiations, the treasurer may remain mostly off the radar. Then he or she may finally be brought into the loop near the end of the discussions, at which point the treasury team has insufficient time for planning the post-merger transition.

However, one key area in which treasury can plan adequately in advance and from a distance is M&A escrows. Typically relegated to the back burner in the midst of a transaction, escrows have increasingly become a point of focus among treasurers given new regulatory changes and emerging investment options.

M&A escrow accounts are formed to hold a portion of the agreed-upon purchase price in escrow as protection against certain potential losses. For example, if the selling company misrepresents some fact about its business, or if it fails to perform a required task prior to closing, the buyer could regain any losses by making a claim against the escrow account rather than filing a lawsuit against the acquired company’s former shareholders. The duration of a typical M&A escrow is 12 to 24 months. In some cases, that term is extended if indemnification claims are made under the merger or acquisition agreement.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.