I am selling some shares to a mergers & acquisitions company and have been asked to lodge an amount of money in escrow as a performance bond. Could you advise further please
If I understand the situation described in your question correctly, a company in which you own stock is a target in a mergers & acquisitions (M&A) transaction and you will be paid cash for your stock. You have been asked to escrow part of the proceeds as a part of the transaction.
Such escrow arrangements are not unusual in an M&A transaction. The governing agreement will include statements regarding the condition of the selling company called representations and warranties. There may even be some contingent liabilities disclosed in the governing agreement. Money would be escrowed from the proceeds otherwise payable to all selling shareholders so that the buyer has a pool of case to use if certain types of things "go wrong" after purchase. Typically, the escrow money is held for at least a year and sometime for two or more years. If nothing "goes wrong" and there are no claims made on the escrow funds, they would be delivered to the selling shareholders, together with accumulated interest.
While escrows are common, this is the sort of transactions where you would be well advised to retain an attorney experienced in M&A transactions. There are many different ways to structure escrows and you need situation-specific counsel.
