Escrow Services in Mergers and Acquisitions Transactions

In a transaction, the retention and blocking of funds may be necessary for the execution of the operation. In such a case, the blocking of funds takes the form of an escrow account opened by a third party, which will hold these funds in accordance with the terms of a tripartite agreement until certain agreed contractual conditions for the release of the funds from the account have been fulfilled.

Each transaction requires the operational modalities of the escrow account to be tailored to the specific operation (including, notably, the amount of money to be retained, the conditions necessary for the release of the funds, the timeline, etc.). The third-party holder of the escrow account, acting as the escrow agent, must meet requirements for competence and reliability and must respond promptly to the parties' requests. The escrow agent must also act independently and impartially to ensure the proper execution of the transactions.

Aether Financial Services is the go-to escrow agent: recognized and reliable, Aether offers fast, tailored, and secure solutions. As a specialist in financial services, Aether has a team of experienced professionals to assist and support its clients during the setup and throughout their transaction.

The establishment of an escrow account is primarily based on straightforward documentation that can be quickly adapted to each situation and effective management of KYC/AML controls.

Furthermore, Aether ensures the quality of its service (i) by maintaining an established partnership with tier 1 banks; (ii) by keeping required notifications up to date; and (iii) by providing a single, available, and responsive point of contact until the completion of the transaction.

As an international player, Aether Financial Services operates in numerous countries: France, Luxembourg, the United Kingdom, Benelux, Germany, etc.

Drawing on its experience, Aether Financial Services offers, in particular, the establishment and opening of tailored escrow accounts

in the field of Mergers and Acquisitions (M&A). Such escrow accounts can, for example, ensure the implementation of the sellers' liability under the target company's indemnity guarantee post-acquisition, by retaining a certain sum of money (usually a percentage of the purchase price) to cover the target's potential liabilities. The same mechanism can also be employed in anticipation of claims from the acquirer arising from inaccurate representations made by the seller.

The establishment of an escrow can be advantageous during financing operations, particularly to (i) meet pre-financing requirements, (ii) manage successive drawdowns on long-term financing, or (iii) retain liquid assets as collateral for creditors.

Furthermore, escrow serves as an effective tool in litigation, as it provides a reserve to cover associated costs or to ensure the safekeeping of disputed funds pending judgment.

In addition to this activity, Aether Financial Services also operates as an expert in calculations, middle and back office services, and valuations, which are integral to the daily services offered.