---
title: "What Is Escrow? Private Equity Glossary | Capstreet"
description: "Escrow is money held by a neutral third party after closing to cover possible claims against the seller, then released if no claims arise."
url: https://capstreet.multisites.ai/glossary/escrow
publisher: Capstreet
phone: +1-713-332-2700
contact: https://capstreet.multisites.ai/contact
---

Deal structure

# Escrow

Escrow is money held by a neutral third party after closing to cover possible claims against the seller, then released if no claims arise.

Escrow holds part of the sale price with a neutral agent for a set time after closing. It gives the buyer a source of payment if a covered problem shows up, such as a breach of the seller's statements.

For example, a $30 million deal sets aside $1.5 million in escrow for 12 months. If no valid claims appear, the agent releases the money to the seller. If the buyer proves a covered loss, it is paid from the escrow first.

Escrow matters because it delays part of your payout and affects your net proceeds. Terms to negotiate include the amount, the time and the exact claims it covers.

It often works with [representations and warranties](https://capstreet.multisites.ai/glossary/representations-and-warranties), which are your statements about the company. Ask your lawyer to review the language. Learn about other price terms in the [earnouts guide](https://capstreet.multisites.ai/guides/earnouts). Related: [seller financing](https://capstreet.multisites.ai/glossary/seller-financing).

[Read nextThe letter of intent: what it says, what binds you and what to negotiate](https://capstreet.multisites.ai/guides/letter-of-intent)

## Related terms

-   [Representations and Warranties](https://capstreet.multisites.ai/glossary/representations-and-warranties)
-   [Earnout](https://capstreet.multisites.ai/glossary/earnout)
-   [Seller Financing](https://capstreet.multisites.ai/glossary/seller-financing)

## Ready to get started? Let’s talk.

Tell us about your company and what you want next. Conversations are private, and there is no obligation.

[Start a conversation](https://capstreet.multisites.ai/contact)

[(713) 332-2700](tel:+1-713-332-2700)[connect@capstreet.com](mailto:connect@capstreet.com)

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