M&A Glossary

A Holdback Escrow is a portion of the purchase price that a purchase does not immediately give to the seller upon closing to ensure that there are no post-closing issues with any of the representations and warranties of the seller. The purchaser places the holdback escrow in a third-party escrow account until the holdback period has elapsed and the representations and warranties made by the seller have not been deemed breached, and at which point the holdback escrow is released to the seller. The holdback escrow amount is usually a percentage of the total purchase price.