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What Is The Standard Escrow Time Period And Is That Even Important?

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Comments & Replies: 3     Views: 1178     Posted By: Joel Miller  

Escrow periods vary depending on type of business, licenses involved, and a host of other business for sale factors. Joel Miller (Southern California Elderly Care Home Specialist) initiates this discussion on how long escrow should last and if it's even important on how long it may last.

Topics: Escrow Closing Issues     Tags: buying a business, escrow bulk sales, selling a business



The Buyers are excited! An offer has been accepted. Sellers are making plans. Due diligence has been started, checklists are being created and... wait a minute, escrow has just started and everything is put on hold until escrow has given us the "green light".

In the world of Elderly Care/Assisted Living home sales, a 60 day escrow/closing period is almost a minimum time period for us. Escrow needs plenty of time to cover all of the bulk sales requirements, they need to collect and disseminate pertinent information. Funds are delivered, accounted for and distributed as instructed. State licensing agencies, family members of Residents, Employees and of course Residents need to be notified of a sale taking place. Agreements need to be created, licensing applications need to be submitted and so forth.

Yes, your escrow time period is very important and please do not rush through the process with out taking a considerable amount of care and due diligence with one of the greatest investments you will make. Unless you have a "hole burning in your pocket" to spend that money, take your time.


Typically 45-60 days, depending on the size or type of landlord, and if there is any licenses, such as ABC, to be transferred. The longer the escrow period, the higher the probability of a deal blowing up and going sideways, so it helps to have an escrow officer that is on top of things and keeps the escrow moving.


As with many aspects of business sales "typical" and "standard" are difficult terms.

Consider the time from executing the contract until the cash is in the seller's account.

Once a contract is signed, the deposit needs to be placed with the escrow agent, and "due diligence" begins. Due diligence can take 5 hours, 5 days, 5 weeks, or even (God forbid) 5 months -- it all depends on the business, the availability of books and records, the cooperation of the parties, the schedules of the CPAs and attorneys, etc.. Then, once due diligence is complete, there are other factors: (1) loan applications and financing approval, (2) agreement with the landlord for transfer of tenancy through one means or another, (3) and the escrow agent getting sales tax and employment clearances, getting the bulk sale transfer notice recorded and published, and the UCC-1 searches on chattel liens being completed. In a perfect world, the escrow agent can have this done in three weeks, but at least four weeks is more likely and reasonable.

So, there is no "standard" escrow time. But, all parties should remember "Time kills deals." It is in everyone's best interest to act expeditiously and cooperatively once the contract has been signed.


  Helpful Resources To Assist In Selling And Buying California Businesses

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 800-864-0420.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Brian Loring, Business Broker - LA County Area

Broker since 2005, closing more than $150M in business & commercial transactions. I am the Owner of the San Fernando Valley office for First Choice Business Brokers in Burbank, serving clients throughout Southern CA. We help you sell your business quickly, confidentially and at maximum value.

Larry Larsen, Broker, Laundry Specialist - Orange, LA Counties

Larry Larsen, Realtor has over thirty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone Larry at 714-630-9274.

Mani Singh, Business Broker, Southern California

I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.


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Don't Fall For "The Tangible Trap" - Overpricing Your Business When Sell...
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