In most M&A deals, escrow is treated as a formality: a neutral account to park funds and manage risk. But the choice of escrow agent impacts both closing certainty and deal economics. Traditionally a cost centre, escrow can now be a value driver. With higher interest rates and cross-border complexity, a modern agent can do far more than hold money, it can help preserve value.
1. Escrow: the underestimated friction point in M&A
Whether the funds are held for a warranty period, a completion mechanism, or a regulatory clearance, escrow mechanics often become an afterthought, a last-minute decision. Yet, mismatched expectations between buyers, sellers, counsel, notaries, and banks frequently delay closings or introduce operational risk. For equity sponsors and founders, the escrow may represent a significant portion of the consideration. But the operational aspects — KYC, account opening, interest treatment, release mechanics — often go unexplored until the last minute. That’s where neutrality and specialist capability matter.
2. A cross-border challenge: notaries here, agents there
In jurisdictions such as Germany, the Netherlands, and Spain, notaries traditionally hold funds for real estate and corporate transactions. Their role is to bring trust and ensure proper execution — but the model does not always translate seamlessly in cross-border M&A.In UK or US-style deals, the notary doesn’t exist, and the parties must rely on either a bank or an agent to hold the funds. Banks are sometimes slow, selective, and rarely geared towards bespoke deal mechanics and high number of payments. In the EU, notaries can introduce additional procedural steps and costs on the other hand. Similarly, in countries where law firms used to hold funds during M&A processes, the lawyers are increasingly reluctant to do so due to AML and KYC requirements, and the need for speed of execution. A modern independent escrow agent bridges these worlds: the trust and neutrality of a notary, without the rigidity — and without the fees.
3. From “dead money” to value creation: the interest-bearing escrow
Here is the overlooked opportunity. A £50M consideration held for three months in a standard non-interest escrow earns nothing. In effect, it becomes dead capital. An interest-bearing escrow, even at conservative short-term rates, can meaningfully alter the economics for shareholders:
• £50M held for 90 days
• Interest at 2% p.a.
• Result: around £250,000 of revenue generated
For sellers, this can mean the difference between yet another transaction cost and a net gain. For private equity buyers, it enhances IRR and reduces opportunity cost — all while maintaining the same risk protections. This simple shift transforms escrow from an administrative necessity to a profit-preserving mechanism.
4. Neutral, operational, and aligned with all parties
A modern escrow agent must bring more than a bank account. It must bring clarity, speed, documentation discipline, transparent release mechanics, and true independence.When the agent has no economic interest in the outcome and no ties to either party, trust flows more naturally — and disputes decrease.
The result: faster closings, fewer surprises, and better outcomes for both buyers and sellers.
Full transparency: Escrow is part of what we do. Altrium delivers rapid onboarding and account opening around Europe (often within 72 hours) and ensures all escrow accounts earn deposit returns.