Pilatus, PC-24

Escrow Account

Bridging the Deficit of Trust Between Buyer and Seller

Are you planning to buy a company, a property, or another big-ticket item such as a private jet, a yacht, or a helicopter? But you don’t want to make payment before receiving the object?

Our Escrow Services provide a reliable solution to ensure your transaction closes properly, bridging the well-known trust deficit between buyer and seller.

What is Escrow

Escrow services are provided by a neutral and independent third party, known as the Escrow Agent (or "Closing Agent"), acting on a fiduciary basis on behalf of the two other parties in a transaction.

The Escrow Agent, who is not a party to the underlying contract, prepares an Escrow Agreement that guarantees both parties fulfil their contractual obligations, thereby mitigating potential disputes.

Typical cases of escrow include:

• Share deals (M&A);
• Real estate / art deals;
• IP deals (e.g. royalties, software);
• Payment method in international trade transactions.

In international trade, the advantage of settlement through escrow is that the buyer gets an opportunity to inspect the consignment and decide whether to accept or reject the goods.

Escrow Services - Safely Close Your Transaction

We will work with you on drafting an Escrow Agreement tailored to your needs, in addition to advising on the ideal release conditions. We will open an Escrow Account and co-ordinate the closing activities.

We will act as impartial escrow agents and monitor compliance with relevant regulations for the entire escrow period.

The Escrow Process

Real estate transactions involve a tremendous amount of technical experience and knowledge.

Typically, the following steps are involved:

• "Visual Inspection" of the product, valuation, price negotiation, agreement;
• The property is taken off the market;
• A pre-purchase agreement is signed;
• Pre-payment into escrow (also known as "Earnest Money Deposit"), whereby the buyer assures the seller that he will complete the transaction if the product meets the offer’s terms;
• Signature of a Sales and Purchase Agreement ("SPA");
• Signature of the Escrow Agreement;
• Payment of final amount into escrow;
• Signature of the closing documents;
• "Closing Call": transfer of title and release of deposit. The Closing Call typically takes the form of a meeting, a telephone conference, or an e-mail exchange.

Common Escrow Instructions

• How the escrow agent will receive and hold the funds;
• The timeframe for the transaction to close;
• The particular actions ("milestones") each party must perform and without which the escrow agent cannot close;
• Instructions for paying taxes and insurance.

Duration of Escrow

In private transactions, the duration of escrow entirely depends on the negotiations between the buyer and the seller.

In corporate transactions, escrow arrangements are often designed to last for an extended period rather than simply to complete the transfer of an asset.

Asset Protection

We hope for the best but are prepared for the worst. Our escrow accounts are held with top rated Swiss financial institutions with an international reputation for escrow.

An additional layer of security is provided by segregation, as the escrow account is not part of the bankrupt’s estate in the event of insolvency of the escrow agent.

Escrow Fee

Escrow fees depend on the complexity of the transaction and are typically a percentage of the transaction amount. Some SPAs provide for sharing the escrow fee between buyer and seller.

Astrantia offers full escrow services covering all steps from the moment the object is taken off the market to the final Closing Call.

For our services, we charge 0.5% of the transaction amount, but at least CHF 8,000.

Our escrow services include:

• M&A advisory;
  
• M&A due diligence;
• Drafting of the SPA;
• Drafting of the Escrow Agreement;
• Opening of the Escrow Account;
• Co-ordination of the closing activities;
• (and, if needed) M&A public relations.

Open an escrow account