Buying a business is one of the largest monetary transactions you’ll make. Both buyers and sellers need an extra level of protection until the transaction is finalized. With more at stake, you can’t afford to have anything go wrong.

The business owner needs the peace of mind that you, the buyer, has the liquid capital to finance the purchase. However, you also need assurance that your transaction is protected if something is amiss with the sale process. This is where a commercial escrow comes in.

Why are more buyers and sellers choosing commercial escrow services? Here’s a closer look at the benefits of business escrow.

What Is a Commercial Escrow?

The term “escrow” is closely associated with residential real estate, but it’s also an invaluable asset for commercial buyers and sellers. Just like a real estate escrow, a business escrow is a contract with an escrow company. An escrow company protects your investment until the sale is ready to close.

Accountability from All Parties Involved

Accountability is essential for smooth commercial transactions, especially when there are multiple parties involved. With a business escrow, all parties understand that payment will not move forward until the business sale terms are completed on both sides.

Protection for Commercial Sales Gone Bad

Escrows keep parties honest about their sales contracts. They also come in handy when there are bumps in the sales process.

For example, a commercial seller may have stated an incorrect annual revenue for the business. Since due diligence is on the burden of the buyer, these types of revelations may appear later on. What do you do if you find out a business isn’t nearly as valuable as you thought?

With a commercial escrow, you can pull out of a bad sale unscathed. The same cannot be said if you already paid a commercial seller in cash or cashier’s check. With an escrow, the money won’t even make it to the seller since they didn’t enter into the deal in good faith.

No Surprise Business Liens

Finding out that your dream business has a lien can throw everything off track. It’s even worse when the lien amount is larger than your deposit. This is another reason to use an escrow service rather than paying upfront.

Your business escrow contract ensures that all liens must be paid before the sale is finalized. A commercial escrow company will also make sure that all creditors have a chance to file their claims before closing the deal.

How Long Does Commercial Escrow Take?

A smooth commercial escrow process could take anywhere from 30 to 60 days to finalize, or even less.

Consult with an experienced independent escrow professional for a more comprehensive timeline. The quicker you provide your escrow company with the required details, the sooner the process can begin.

Start the Business Escrow Process Today

Have you found the ideal business for your goals? Protect your future purchase from the beginning. Consider the benefits of a commercial escrow for your sale.

Are you ready to buy the business of your dreams? Contact us today to get started on the escrow process, so you can start generating revenue for your new venture.