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Escrow & Closing Guide

How funds are protected from offer to close — and why it matters.

What Is Business Escrow?

Business escrow is a neutral third-party arrangement where the buyer deposits purchase funds before the seller transfers the business. The escrow provider holds the money in trust and only releases it once both parties confirm that all closing conditions have been met. It eliminates the risk of a seller disappearing after funds are sent — or a buyer backing out after assets are transferred.

The Closing Process — Step by Step

1

Letter of Intent (LOI)

Buyer and seller agree on price, structure, and key terms. The LOI is non-binding but signals mutual intent and kicks off due diligence.

2

Due Diligence Period

Buyer verifies financials, legal records, and operations. Typically 30–60 days. Either party can walk away if findings don't align with expectations.

3

Purchase Agreement

Attorneys draft a definitive purchase agreement covering assets or shares being transferred, reps & warranties, non-competes, and transition terms.

4

Escrow Opened

Buyer deposits funds with a licensed escrow provider (e.g., Escrow.com). Neither party can access the funds until closing conditions are met.

5

Asset Transfer

Seller transfers business assets, domain, accounts, equipment, or shares as outlined in the agreement. Buyer confirms receipt.

6

Escrow Released

Once both parties confirm transfer, the escrow provider releases funds to the seller. The deal is closed.

Escrow Fees

Escrow fees are typically 0.89%–1.5% of the transaction value, with minimums around $50–$100. Fees are usually split 50/50 between buyer and seller, though this is negotiable. On a $500K deal, expect to pay $2,200–$3,750 in escrow fees total.

Clozur integrates with Escrow.com, a licensed and regulated escrow provider used by thousands of business transactions annually.

What Escrow Does NOT Cover

  • !Legal advice — hire a business attorney to review purchase agreements
  • !Tax structuring — consult a CPA on asset vs. share purchase implications
  • !Post-closing disputes about undisclosed liabilities
  • !Reps & warranties insurance (available separately for larger deals)

Secure Your Next Deal on Clozur

Clozur deal rooms keep your documents, offers, and communications in one secure place — and escrow integration means funds are protected at every step.

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