An escrow holdback is a portion of the price in a business sale that the buyer does not pay to the seller at closing. Instead it is deposited with an independent escrow agent, usually a bank, under an escrow agreement signed by all three parties. The money secures the seller's obligations after the sale: chiefly indemnity claims for breaches of warranties, and sometimes a purchase price adjustment once final accounts are agreed.
The amount is commonly a modest percentage of the price, and the period often runs for twelve to twenty-four months, matching the life of the general warranties. If no claims are pending at the end, the agent releases the balance to the seller; disputed amounts stay until resolved. A plain holdback, where the buyer simply keeps the money, is weaker protection for the seller. An escrow differs from earn-out consideration, which depends on future performance.