Escrows for Business Sales

Business escrows are utilized for both asset and stock sale/purchase transactions to protect the buyer, seller, and any lender. It is the policy of Pacific Business Advisors to require the services of a business escrow for all transactions in order to make certain that all parties are protected.

While every transaction is different, business escrow holders generally perform the following important functions:

  • Preparing written escrow instructions setting forth the duties of the escrow holder and the terms of the agreement between the buyer and seller;
  • Complying with the Bulk Sale laws, if applicable;
  • Obtaining and holding any funds from the buyer and lender, if applicable;
  • Notifying and obtaining any required clearances from government agencies;
  • Requesting any pay-off demands from lien holders, if applicable;
  • Prorating any interest, taxes, and rents, if applicable;
  • If required, preparing and filling any fictitious business name statements;
  • Preparing estimated closing statements for the buyer, seller, and lender, if applicable;
  • Securing tax clearances;
  • Recording any UCC -1 forms, UCC-3 forms and deeds of trust, as required; and
  • Closing the escrow when all instructions of the parties have been satisfied, including the distribution of funds and documents.

There are times when parties to a sale/purchase agreement want to waive the use of a business escrow. We strongly encourage the use of a business escrow holder for every transaction even if the dollar amount is small.