The Indemnity Escrow Trap in Middle-Market M&A

The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators · Jun 11, 2026 · 13m · transcript

Episode 44 of The Acquisition Talk breaks down a hidden risk in middle-market M&A: the indemnity escrow. Lucas and Luna walk through a real 2025 case where a $12 million escrow nearly wiped out a seller's post-close proceeds due to a vague working capital adjustment clause. They explore how escrow mechanics work, why sellers often underestimate the holdback percentage, and what buyers look for when disputing claims. The hosts contrast uncapped indemnity with the more seller-friendly 'basket and cap' structure, and discuss how the rise of representation and warranty insurance…