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Escrow

By Hoke - Last updated: Monday, September 3, 2012 - Save & Share - Leave a Comment

Typically after the successful completion of Due Diligence the acquisition process is ready to open escrow. The buyer should be committed to purchase the business without further doubts. At this time the Good Faith Deposit is deposited in the escrow’s bank Trust Account. The purpose of a business acquisition escrow is to provide free and clear title from the seller’s secured creditors, unsecured creditors, lien holders, judgments and tax liens. To get the business free and clear is to buyers benefit, the escrow process should not be circumvented. It is typical for a Stock Sale not to use escrow since the buyer will assume the liabilities via the corporation. See Asset Sale versus Stock Sale. The escrow office will check with the Secretary of State for liens, tax liens and judgments. Escrow will publish a Bulk Sales Notice to identify unsecure creditors. The escrow office will request Written Tax Clearance State Board of Equalization and EDD. Any money due to creditors or tax agencies will be paid from the seller’s sale proceeds at close of escrow enabling the buyer to acquire the business free and clear of creditor liabilities. The Asset Sale escrow process typically takes about 30 days. If the Asset Sale is a restaurant or bar that includes transfer of a license to sell alcohol, the process takes about 60 days.

We Provide Buyer Support!

Whether you would like full broker representation or an advisor who is a phone call away, having an expert in your corner can make a profitable impact on your acquisition. If the listing broker will cooperate, we can represent you at no cost to buyer. If the listing broker will not cooperate we may be able to quote a reasonable buyer paid commission. We can also work with a consulting fee which can be reasonable if the buyer has located the acquisition themselves. An opportune time to bring us in is prior to written offer or during the acquisition process. Sooner is better since it is easier to avoid problems than to fix them. Call Hoke Nagahori at 310-941-2230 or email us at our contact page for a no-charge consultation and quotation.


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