Closed on my logistics company in late 2023. Purchase price was $1.8M, with a 10% escrow holdback ($180k) held for 90 days to cover any working capital adjustments or undisclosed liabilities. The buyer's accountant came back at day 85 claiming $22k in 'unrecorded payables' and wanted to keep that from the holdback. I pushed back with my closing statement, bank records, and vendor confirmations. Escrow agent reviewed and released the full $180k on day 92. Happy to share what documentation actually mattered if anyone is in the same spot.
Escrow
How I got 100% of my escrow holdback returned after 90 days
what did the escrow agent specifically ask for? I'm at day 60 of a similar holdback and the buyer has gone quiet, which makes me nervous.
The quiet part is usually good. If they had a real claim they'd have raised it by now. In my deal the buyer tried to keep $9k for a 'software subscription prepayment' that was already on the closing balance sheet. I sent the original invoice and the signed closing statement side by side, and that was that. Escrow agents don't adjudicate, they just want to see the paper.
Did your purchase agreement have a specific dispute resolution clause for the holdback? Mine says any disagreement goes to an independent accountant whose decision is final. That might be what saved me from a long fight.
How were your vendor confirmations formatted? I'm worried mine will look like I just called them up and asked for a favor.
Sable - in my case I had the buyer's own AP aging report from the data room. Anything they flagged as unrecorded, I matched against that. If it wasn't on their own list, it wasn't unrecorded.
Not every escrow release goes this smoothly. I know three sellers in my industry who had to eat a few thousand just to get the rest released. The cost of fighting usually exceeds the disputed amount, so buyers know they can squeeze. OP got lucky that his dispute was only $22k against a $180k holdback. At that ratio it's worth pushing. At $5k against $20k, most people just sign the release and move on.
Dan has a point but I'd push back a little. The escrow agent's job is to follow the agreement, not to weigh who can afford a lawyer. If the buyer's claim is genuinely unsupported, the agent will usually release. The problem is sellers who don't respond at all and let the deadline pass. Silence is treated as consent in a lot of these agreements.
That last part is what worries me. My agreement says if neither party objects within 90 days, funds release to the buyer. I assumed it was the othe way around until I reread it last week.
Read it again carefully. Some agreements default to the seller, some to the buyer, some require a joint release instruction no matter what. If yours defaults to the buyer, you need to send a written objection well before day 90, even if there's no actual dispute yet. A short letter preserving your rights is cheap insurance.