How Much Money Do You Put in Escrow When Buying a Business?
Written by Christopher Krassnig - Founder - Kairos Exchange and ZenoX Media.
Published
- Checks in every memo8
- Automatic on day one3 of 8
- Read by handad spend and processor payouts
- Tracked ecom salesEUR 200M+ZenoX ad-management figures, not Kairos deal volume - Kairos hasn't closed a deal yet.
On a small business sale the escrow amount is normally the entire purchase price, not a deposit. The buyer funds the full sum with the escrow agent before any asset moves, and it releases once the buyer confirms the handover. Smaller amounts do exist in a deal, but they sit elsewhere: earnest money at the letter-of-intent stage, and a holdback that stays behind after closing.
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Why the Whole Price, Not a Deposit
Escrow exists to remove one specific fear: that a seller hands over a store and never gets paid, or a buyer pays and never gets the store. A part-funded escrow only removes part of that fear. The seller is still exposed for the remainder on handover day, which is exactly the day they have the least leverage. Fund the whole price, or you have only protected part of the deal.
The Two Places a Partial Amount Belongs
Earnest money comes first: a small sum, often 1 to 5 percent, that a buyer puts up at the letter-of-intent stage to show a conventional exclusivity request is serious. Kairos uses a refundable offer deposit but does not grant LOI exclusivity. A holdback comes last: a slice of the price that stays in escrow after closing until agreed conditions hold. Neither replaces funding the full cash-at-close amount before transfer, when each side needs the protection most.
What Kairos Requires
The full amount, before anything moves. Funds release only after the full amount is funded in escrow, the APA is signed, every critical asset is handed over, and the buyer confirms the transfer. Our fee is auto-deducted at that moment, before the seller is paid. The deal room enforces the same sequence it describes, so a seller cannot be talked into handing over the store admin first as a favour.
Related questions
Terms Used
Holdback
Holdback is the slice of a purchase price kept in escrow after closing until agreed conditions hold, typically that revenue stays near what the seller claimed through the transition.
Closing
Closing is the point in an online-store sale where the deal legally completes: the asset purchase agreement is signed, every asset has moved, and escrow releases the price to the seller.
Buying a Store Somewhere Else?
Kairos Due Diligence works on any deal - Flippa, a broker, a private sale. A person reads the store's raw numbers and writes you a report. If the deal is bad, the report says walk away. From EUR 1.5K, no account needed.
Answered. Now Get in Line for the First Store
When the doors open, verified stores go to the waitlist first. You have done the reading part. The list is the part with a queue.