Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Holdback

Definition

An amount of the purchase price that is held by a neutral third party in a separate account for a period of time after the closing to satisfy any of the seller’s indemnification obligations. The amount is paid to the seller after a specified amount of time following the closing when all claims of the seller on the business are proven to be true.

Tips

Holdbacks are common in middle-market transactions, while being much less common for the sale of smaller businesses. A typical holdback is 10% to 15% of the purchase price.

Related Resources

Escrow Holdbacks in M&A Transactions