Business Escrow

Welcome to Step Seven, Business Escrow, in the process of selling your business on California Business Broker .com. Once the buyer and seller have successfully navigated through the due diligence process and both agree to proceed, the contingencies are removed and escrow is opened. At this point the buyer's earnest money deposit is deposited into escrow. If you've purchased property before, then you know that escrow's role is to act as a neutral third party throughout the transaction.

Please note, that up to this point no monies have exchanged hands and no costs have been incurred by either party. We have found that by conducting due diligence prior to opening escrow and exchanging money that the transaction typically will move forward more smoothly and more quickly.

The first step in opening a Business Escrow is the signing of escrow instructions. Escrow instructions will clarify the roles of all parties and further clarify the purchase agreement. The signing of escrow instructions opens escrow and the typical escrow period is 30 to 60 days.


1. Notice to creditors of a bulk sale.

2. Request a publication recording and a UCC lien search.

3. Request a beneficiary statement if debt or obligationsis to be taken over by the buyer.

4. Comply with lender's requirements specified in the escrow agreement.

5. Will receive the purchase funds from the buyer.

6. Prepare or secure the loan or any other documents related to the escrow. If the seller is financing, escrow will obtain the note and security agreement.

7. Pro rate taxes, interest, rent, and security deposit.

8. Secures the relief of all contingencies or other conditions as imposed on any particular escrow.

9. Closes escrow when all instructions of the buyer and seller have been carried out including the bill of sale, assignment of lease, sublease or new lease, abandonment of fictitious business name, and clearances from the State Board of Equalization Employment Development Department and Franchise Tax Board.

10. Escrow will disburse funds as authorized by the instructions including payoffs of any fees or liens.

11. Record Uniform Commercial Code 1 and/or 3 if necessary.

12. Prepare final statements for the parties accounting for the disposition of all funds deposited in escrow.

A Business Escrow is an important step in the process of selling a business. Escrow completes many very important tasks for, in my opinion, a very reasonable fee. The role of escrow is to protect all the parties involved and it's important for escrow to complete its task to protect both the buyer and seller from any ongoing liability.

Once escrow closes then in most cases the new owner training period will begin. The new owner training is a negotiated period of time where the seller will work to train the new owner in the operation of the business. This, like other aspects of the transaction, vary from business to business. In most situations a one or two-week training period will be sufficient. In a very technical business or in a business that is based on client relationships a longer training period may be required.

Typically the owner does not get paid for the new owner training period. In some cases an earn-out or a consultant fee may be appropriate.

If you're a successful business owner in the Southern California area, we would like the opportunity to learn more about your business and to tell you about how our innovative and proactive methods can help find qualified, capable buyers for your business. Please contact us today.

If you need a referral for a Business Escrow - Go to California Business Broker .com contact page.
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