Strescrow: Why Stress Is Inherent to Escrow

October 13, 2021Insights

Something will go awry. It’s the last thing you want to hear when you’re so close to selling your business, but it’s the nature of the game and part of the journey.

After preparing your business for the sale, listing it on the market, sorting through prospective buyers, finding the right match and negotiating a deal, escrow is the home stretch. The win is within arm’s reach. The exit is in the air. But something—something—will disrupt the transaction. We hope it’s just a small glitch, but it could potentially be something serious. Going into it, we want you to know:


Escrow Is a Life Event

When the stakes are high, so are stress levels. Even if you’re cool, calm and collected with everything under control and seemingly nothing to lose, being in escrow is a big deal. Your exit is the closing of one chapter and the beginning of another, and the transaction is a key piece if not the centerpiece of your financial future. Meanwhile, someone else is all in your business, literally, dissecting every detail from every angle. Escrow alone, when everything is going well, will raise your cortisol levels.


It’s Kind of Like a Wedding

When your business is on the market, you’re having conversations with different buyers. When you meet a buyer you like, you take the conversation further, and if you both see each other as a match, all the other buyers and sellers fade to the background. You and your buyer are going steady, talking exclusively. It’s similar to dating, and soon, engagement a la escrow.

In escrow, you’re essentially planning the wedding that is the sale. Any wedding planner or married couple will tell you that every wedding has its “something.” Maybe you remember your something from your wedding. A missing entrée? A trip on the dance floor? A ring bearer on crutches? In escrow, these hiccups equate to unexpected delays, extra paperwork, or a sticking point that we need to iron out between the parties.


Your Business Keeps Moving

While closing the deal to sell your business, we’re operating in a dynamic environment. It’s not like selling a home, where you have showings and open houses over the course of weeks or months, and everything looks the same each time you return.

The market can change. Your largest customer could no longer need your service. A key employee could leave. And again, even when everything is going smoothly, the time commitment of adding a complex business transaction on top of running your company can impact your mind and body. Oftentimes, an owner might not want to make the sale known to employees and customers, leaving only weekends and after-hours for the second full-time job of navigating the sale.


Life Can Get Real

Business is made of people, and people have lives that can be uprooted at any time. When illness, death, divorce or family issues come into the picture, we have two life events (escrow and the crisis), plus two-full time jobs (running your business and selling it), minus the energy you were burning to begin with. The stress is through the roof and the sale that you were so excited for takes a backseat to grief. Where do you go from here?

We can’t predict how escrow will unfold and what your “something” will be. But know that we’ll weave through the small stuff and be there—not only as professionals, but as people—if a major life event occurs. No matter what happens, the business is still legally yours until we close escrow. We protect your personal interests and help you take the challenges in stride, with your ideal exit—your win—as our guiding light.


By John Ovrom, President & CEO, Exit Consulting Group