Escrow
The holding of part of the purchase price by a neutral third party to secure claims arising after closing.
With an escrow part of the purchase price is held on a trust account by a neutral third party (notary, lawyer or bank). Release follows the conditions set out in the escrow agreement and the share purchase agreement. This secures potential buyer claims under warranties or indemnities.
The escrow bridges the period during which warranty breaches or price adjustments may still arise and secures the recoverability of claims against a seller who may no longer be solvent or available. In Austria this function is often performed by a lawyer or notary acting as trustee; the escrow arrangement is frequently set up at closing.
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This explanation gives a general overview of Austrian law and does not replace advice in an individual case. The specific circumstances of your transaction are always decisive.
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Warranties
Independent assurances by the seller about specific characteristics of the company, the breach of which triggers damages or price-adjustment claims.
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Indemnity
A contractual undertaking by the seller to hold the buyer fully harmless against a specifically identified risk.
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Closing
The completion of the transaction at which, once all conditions are satisfied, the shares are transferred and the purchase price is paid.
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Share purchase agreement (SPA)
The central agreement governing the acquisition of a business (share or asset deal), covering the object of sale, purchase price, warranties and completion.
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