E-commerce · Deal Structure

Indemnity and escrow reserve

Published · Reviewed by The Diligence Standard Team · Updated

Escrow economics should be assessed with survival, baskets, caps, exclusions and collectability.

Records to reconcile

  • Draft indemnity terms
  • Finding and exposure register
  • Insurance and seller resources

Warning signal

The headline escrow amount is viewed without the limitations on actual recovery.

Transaction impact

Effective protection can be much lower than nominal value.

Response

Evaluate recoverability and avoid double counting with price adjustments.