Glossary · Doing the deal
Escrow
In short
A financial arrangement where a third party holds funds or assets on behalf of two other parties until specific conditions are met. This protects both buyer and seller by ensuring funds are released only when agreed-upon terms are satisfied.
What it means in a deal
In a business acquisition, an escrow account is often used for a portion of the purchase price, especially if there's an earnout or a need to secure seller indemnities for a period post-closing. Funds are released from escrow based on milestones or after a set timeframe, providing security against unforeseen liabilities or performance issues.
Related terms
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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