In-house lawyers: Escrows sweeten M&A deals amid trade tensions

Author: Karry Lai | Published: 6 Aug 2019

In-house practitioners told IFLR that escrows are growing in usage in Asia and can be used in conjunction with R/W insurance in M&A deals. As trade tensions and political instability grows, deal uncertainty in transactions is mounting. Representations and warranty (R/W) insurance is gaining more popularity in Asia, but escrows are also an option that can bring more assurance to a deal.

In addition to trade tensions, capital controls remain an issue in Asia, especially in China. "We’re seeing more use of escrows for private equity funds, especially in cross-border transactions," said Yong Kai Wong, head of special projects at Citic Capital. "With strict capital control rules in China, there is a need to safeguard funds for limited partners (LPs) and escrows can help to alleviate concerns over funding certainty."

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