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Escrow services and trends seen in real estate construction

29 November 2022

Read our latest blog outlining current trends and key reasons to work with Apex Group for all your escrow requirements.

M&A lawyers continue to use the tried and trusted Escrow account option because it’s a relatively quick and simple risk-mitigation tool. Outside of M&A, we are seeing an increase in use from real estate and construction lawyers.

Current trends in the market

  • Escrows are especially prominent in real estate and construction transactions as they can act as a risk mitigation against the possibility of non-payment and credit risks. Employers are being asked to place a portion of the costs for the intended work into an Escrow to mitigate the risk of a periodic invoice not being paid. Similarly sub-contractors want amounts held securely in Trust to avoid the risk of a contractor insolvency
  • Escrows are beginning to be increasingly used in supply chain relationships. This is to mitigate the credit risks between the manufacturer and buyer. The buyer is required to pre-pay for all or part of the costs
  • M&A transactions appear to be taking longer to complete with many missing their intended completion date by over 6 months. As a possible consequence we are seeing the first escrows to cover the risk of M&A termination and the associated costs

The benefits of working with a service provider

Service providers take the responsibility of obtaining the customer KYC, opening the bank account in less than a week and administering the cash flows in and out of the escrow account. The Escrow agreement can be under various legal jurisdictions.

Escrow uses outside of M&A

The value offered by Escrows are not just limited to M&A or real estate. Indeed, they cover a wide range of business transactions. Escrows can be used to help with:

  • Litigation and dispute resolution to show willingness to resolve an issue and demonstrate the ability to pay
  • Pension schemes to either avoid the tax implications of a pension surplus or to address a pension deficit
  • Supply chain credit risks
  • Capital raising to secure investor commitment prior to launch

At Apex Group, we understand that you want a financial service provider that can take care of all your needs in one place. We also understand that your provider must be able to help your firm ensure a smooth transaction. That’s why we pride ourselves on providing for all our client needs with our single-source solution.

How can we help?

Our wide range of Escrow services enables us to provide seamless execution for our clients’ needs across a broad range of business transactions. Furthermore, our Escrow services are not just limited to domestic cash transactions. Our deep understanding of Escrow services also enables us to deal with cross-border transactions and the holding of securities.

Get in touch with our team

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