Holdback (Escrow)
A portion of the purchase price (typically 10–15%) held in escrow for 12–18 months after closing to cover breaches of representations, undisclosed liabilities, or working capital adjustments. Sellers often don't realize 10–15% of their proceeds will be locked up for over a year.
Where This Matters
Related Terms
Need help understanding how this applies to your situation?
Browse All Terms
Enterprise Value (EV)Seller's Discretionary Earnings (SDE)EBITDA MultipleQuality of Earnings (QoE)Add-BacksDue DiligenceLetter of Intent (LOI)Earn-OutAsset SaleStock Sale (Equity Sale)GoodwillPersonal GoodwillCommunity PropertySeparate PropertyPereira MethodVan Camp MethodTransmutationBuy-Sell AgreementShotgun Clause (Russian Roulette Clause)Right of First Refusal (ROFR)View all →