Escrow in a business sale means part of the price is not paid to you at completion. It sits with a third party for a period, available to the buyer if certain things turn out to be wrong. It is normal, it is negotiable, and sellers routinely underestimate how likely they are to see delays or deductions. Three terms decide the outcome and all three are agreed before completion, which is the moment to care about them rather than at the end of the period.
What it is there for
Escrow is security for the promises the seller made in the agreement. If a warranty turns out to be untrue and the buyer suffers a loss, there is money available without having to pursue the seller. From the buyer's point of view it converts a claim against a person into a claim against a fund, which is why they want it and why a portion of the price is routinely held.
The three terms that decide what you get back
How much and for how long. What it can be claimed against, since a fund covering everything is very different from one covering named risks. And how release works: automatic at the end of the period unless a claim is made, or requiring the buyer's agreement. That last one is the term sellers most often accept without noticing and most often regret.
What a seller can do about it
Negotiate the period and the scope, and prefer automatic release. Then, practically: keep the records that would answer a claim. Most escrow disputes are about whether something was disclosed, and a seller who can show exactly what was provided and when is in a completely different position from one reconstructing it from an inbox a year later.
Questions people ask about business sale escrow
Is escrow always used?
Not always, and it is common enough that a seller should expect the conversation. Its size and length are negotiated alongside the warranties, since the two are doing related jobs.
Who holds the money?
A third party agreed between the parties, frequently one of the solicitors on defined terms. The arrangement is a document of its own and is your solicitor's to advise on.
How does preparation help here?
Because a claim usually turns on what was disclosed. A complete, dated record of everything provided is the seller's best answer, and it has to have been kept at the time.