An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met.

The most common examples in financial advisory practice sales are the attrition clauses which require that the buyer pay the seller when specific metrics are achieved in a pre-defined time period.

Having a neutral party handle these transactions benefits both sides.

Advantages to the Buyer

By funding the escrow account, the buyer shows that he/she has the required money. Holding the money in escrow protects the buyer by ensuring that the contractual requirements are fulfilled before funds are released to the seller.

Advantages to the Seller

Because the money has already been paid into escrow, the buyer's ability to pay is not in question. The seller is assured of financing before transferring the ownership of the practice to the buyer.

This service includes the complete administration of the escrow account between the buyer and the seller. Our partner law firm, Kotz Sangster Wysocki, P.C., has extensive experience in the financial services industry and is the escrow agent of record for this service.

This service includes the collection and secure deposit of the funds in the escrow agent's IOLTA account with no interest being paid to either the buyer or the seller. Upon contract fulfillment, the funds will be released to the seller.

In cases where there is a conflict on how much and timing of the release of funds, the escrow agent will deliver the funds to the agreed upon court which has jurisdiction as agreed upon by the buyer and seller in the escrow agreement.

The fee for this service is $2,500 plus a percentage of the deposit, which is paid for by the seller upon execution of the escrow agreement. Asset rates and examples of fees are in the chart below.