The Escrow Trap That Cost a Seller 40 Percent of Their Payout

The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators · Jul 20, 2026 · 5m · transcript

When you sell a business, the standard escrow holdback seems like a routine safeguard — 10 percent of the purchase price held for 18 months. But in this episode, Lucas and Luna unpack a case where a seller agreed to a 25 percent escrow tied to future revenue targets, losing 40 percent of their payout after the buyer changed the forecast methodology. We walk through the specific contract language that created the trap — a vague definition of 'earnings before interest, taxes, depreciation, and amortization' in the escrow release conditions — and how a midmarket software company…