FAQs

Services: Compensation Payments (17)

Why should I use Acquiom® Compensation Payments?

Acquiom Compensation Payments is a hassle-free solution for handling M&A payment processing for payments to option holders and others that must be treated as a taxable employee compensation. We offer accurate tax withholding and reporting, easy record retention, and a scalable, hassle-free way to manage these payments. This is one component of the industry’s only comprehensive M&A payments administration service.

Contact us at sales@srsacquiom.com to learn more.

How does SRS Acquiom know whom to pay and how much?

SRS Acquiom will provide the target company (or buyer, as appropriate) a spreadsheet template or a special Letter of Transmittal (LOT) form.  This is completed by the payees or by the target company with the information needed to pay employees/payees. In most cases, the requested information is quickly obtained from the company’s payroll system via export.

For more information about Acquiom® Compensation Payments, please contact us at sales@srsacquiom.com.

How is withholding calculated?

SRS Acquiom calculates withholding based on the nature of the payment, current tax tables, and W-4 elections of the employees/payees. If a Form W-4 is not provided, a default Single-0 withholding rate is used.

For more information about Acquiom® Compensation Payments, please contact us at sales@srsacquiom.com.

Will Form W-2s be sent to the payees/employees?

Yes, SRS Acquiom will deliver a Form W-2 to each employee/payee for any payments made during the tax year.

For more information about Acquiom® Compensation Payments, please contact us at sales@srsacquiom.com.

Might payees/employees pay too much FICA?

Potentially.  Similar to other situations where employees have more than one employer during a tax year, an employee may have FICA withheld in excess of the annual cap, which is about $7,350 in 2015.  If this happens, employees have several options. Click here for more information on recovering excess FICA payments.

For more information about Acquiom Compensation Payments, please contact us at sales@srsacquiom.com.

 

What is the impact of additional FICA withholding on employee/payees?

Excess FICA deductions are applied to an employees’ general federal income tax liability.  Employees have a few options with respect to any FICA over-payment.  They can reduce their withholding elections for future income by submitting a new W-4 to their current employer, they can claim the excess payment on their Form 1040 when filing their tax return, or they can let the overpayment help pay for their general federal income tax liability.

If you have any questions, or would like more information about Acquiom® Compensation Payments, please contact us at sales@srsacquiom.com.

Who has legal responsibility for remitting the taxes to the IRS?

SRS Acquiom assumes legal responsibility for properly remitting tax amounts to the right tax authorities when Acquiom® Compensation Payments is used.

For more information about Acquiom Compensation Payments, please contact us at sales@srsacquiom.com.

Will SRS Acquiom file an IRS Form 941?

Yes, SRS Acquiom will file a quarterly Form 941 under the business name and with the taxpayer identification number of Acquiom Employee Solutions, Inc. This will include a Schedule R detailing payments made on behalf of each target company or buyer.

For more information about Acquiom Compensation Payments, please contact us at sales@srsacquiom.com.

Will SRS Acquiom remit the withholdings directly to the taxing authorities?

Yes, SRS Acquiom remits the employee withheld taxes and employer payroll tax obligations directly to the appropriate federal, state and/or local taxing authority.

For more information about Acquiom Compensation Payments, please contact us at sales@srsacquiom.com.

Whose taxpayer identification number will appear on the employee/payee’s Form W-2?

Acquiom Employee Solutions, Inc.’s taxpayer identification number will appear on the employee/payee’s Form W-2.

For more information about Acquiom Compensation Payments, please contact us at sales@srsacquiom.com.

How is the employer portion of the payroll taxes funded?

As soon as SRS Acquiom knows the payment amount and payment type to be made to the employees/payees (from data provided by the company), we calculate the appropriate withholding along with any corresponding employer payroll tax obligations. Once the employer payroll tax obligation is known, SRS Acquiom provides that number to the target company and/or buyer (as appropriate in each deal) along with wire instructions for the paying account where the employer payroll obligations are to be deposited.  When the payroll tax obligations are received, we will cause the net amounts to be paid to the employees/payees and taxes remitted to the appropriate taxing authorities. 

For more information about Acquiom Compensation Payments, please contact us at sales@srsacquiom.com.

Why don’t seller or buyer payroll departments handle payments to option holders?

Seller payroll departments don’t typically handle payments to option holders because they often lack the necessary expertise, or do not have payroll systems that are able to process merger consideration to those receiving compensation-based payments. Buyers often assume responsibility to make sure the reporting is done correctly, a costly and time-consuming task. When buyers remain involved (either directly or indirectly) for every post-closing payment, it’s a responsibility they will have for many months.

Acquiom Compensation Payments greatly simplifies payments administration by freeing buyers and sellers from these burdensome and complicated responsibilities.

For more information, please contact us at sales@srsacquiom.com.

Can a paying agent handle option holders?

There are currently no paying agents willing to run the payroll file, calculate withholding, remit withholding to the governing tax authorities and pay the net amount to the holders.  In other words, no paying agent will handle the entire payroll process of reporting and payment. At most, an M&A paying agent will take direction on the amount to deduct from the gross compensatory payment, pay the net amount to the holder and leave the hard part — the reporting and remittance obligation — to the seller or buyer. Acquiom® Compensation Payments greatly simplifies payments administration by freeing buyers and sellers from these burdensome and complicated responsibilities.

If you have any questions, please contact us at sales@srsacquiom.com.

Why do buyers have to worry about post-closing payments?

Buyers are typically responsible for post-closing payments when an escrow is released several months or years after a transaction closes, because often only the buyer remains.  The seller’s payroll department is either no longer in existence or the vendor relationship previously responsible for seller payroll has been terminated. In order to make post-closing payments such as working capital adjustments, escrow releases or earnouts, the buyer payroll department must recreate payroll records and make these payroll payments to people who are no longer employees. Buyers must generate the proper tax forms, calculate and make tax withholdings, send withholdings and documents to the IRS, and then pay and provide Form W2s to shareholders who have never actually been employed by the buyer. Acquiom® Compensation Payments greatly simplifies payments administration by freeing buyers and sellers from these burdensome and complicated responsibilities.

For more information, please contact us at sales@srsacquiom.com.

What IRS reporting and liability does a buyer assume?

In addition to the administrative burden of actually handling payroll for non-employees, the buyer must create the Form W2, generate the Form W2 for the holder, calculate and make tax withholdings, and remit withholding amounts to governing tax authorities if managing employee payments on their own. This can quickly become a liability if not handled correctly. Acquiom® Compensation Payments greatly simplifies payments administration by freeing buyers and sellers from these burdensome and complicated responsibilities.

For more information, please contact us at sales@srsacquiom.com.

What post-closing payroll information must buyers maintain?

Employees who worked for the target company, even if hired initially by the buyer, may at some point no longer work for the buyer. Normally, a company does not maintain up-to-date information on former employees. However, if a buyer takes on the responsibility to make future distributions such as escrow releases or earnout payments, then buyers must keep track of their former employees.  Buyers who use the Acquiom® Compensation Payments are not required to maintain up-to-date records for former employees. When former sell-side employees move, change their address or their payment instructions, SRS Acquiom updates corresponding records to ensure that payments and tax forms are properly delivered. Acquiom Compensation Payments greatly simplifies payments administration by freeing buyers and sellers from these burdensome and complicated responsibilities.

For more information, please contact us at sales@srsacquiom.com.

What deals qualify for Acquiom® Compensation Payments?

In order for a transaction to qualify for Acquiom Compensation Payments, the recipients must be United States-based taxpayers. Acquiom Compensation Payments is designed to cover any payments of merger proceeds that are related to an individual’s employment with the selling company. We can also pay independent contractors, board members and others as vendors through Acquiom generally.

For more information, please contact us at sales@srsacquiom.com.

Services: Shareholder Representation (3)

What does a shareholder representative do?

SRS Acquiom offers professional shareholder representation services, and manages the post-closing rights and obligations of the selling securityholder group. We work closely with the selling company’s appointed Advisory Committee to evaluate, negotiate, and settle any claims against the holdback or escrow fund, keeping the best interest of the securityholders in mind, and with the goal of preserving as much of the fund as possible.

In addition to managing disputes, we work with the paying agent to distribute securityholder pro ratas in accordance to the merger agreement, and we serve as the primary point of contact for any securityholder questions. In many cases SRS Acquiom will be chosen to serve as payments administrator on the transaction, greatly simplifying matters for all parties.

Contact us at sales@srsacquiom.com to learn more.

What is SRS Acquiom’s experience?

SRS Acquiom created professional shareholder representation when Shareholder Representative Services (SRS) was launched in 2007, and we remain the industry leader. We have years of experience managing the issues that arise after closing, having worked with hundreds of venture capital and private equity clients, represented over 100,000 securityholders in 100 countries, and managed over $200 billion in aggregate deal value.

The SRS Acquiom team of 70 experts — corporate and litigation attorneys, forensic accountants, valuation experts, tax professionals, employment experts, and client support specialists — is the most experienced ever assembled for M&A post-closing management.

Contact us at sales@srsacquiom.com to learn more.

How does SRS Acquiom work with securityholders?

Shareholder Representative Services (SRS) handles and responds to any claims against the escrow fund or holdback in order to protect the selling securityholders’ interests. In addition to managing disputes, SRS serves as primary point of contact for any questions you may have as a securityholder. SRS ComPort™ is a secure online site where you can see your escrow balance statements, receive news and other developments pertaining to your transaction, find frequently asked questions, and use many other helpful features. Please visit SRS ComPort for a demonstration.

Contact us at sales@srsacquiom.com to learn more about our Shareholder Representative services.

Services: Acquiom Clearinghouse (11)

What is Acquiom Clearinghouse™?

Acquiom Clearinghouse is a secure, online platform where you can electronically complete your Letter of Transmittal (LOT) in order to receive payment related to a transaction for which SRS Acquiom has been hired as payments administrator. SRS Acquiom also distributes escrow solutions that, when combined with our fast payments administration service, make the closing and post-closing processes simple, and deliver better deal economics.

To learn more, please contact us at sales@srsacquiom.com.

How secure is Acquiom Clearinghouse™?

We understand the sensitive nature of M&A operations and critical need to protect shareholder information. We employ a multi-faceted approach that includes leveraging best-of-breed cloud infrastructure, adhering to industry standards to manage our network, securing our web and client applications, hiring the right people, and setting stringent policies across our organization. To learn more about Acquiom Clearinghouse’s Complete Technology & Process Security, click here.

To learn more about SRS Acquiom’s Privacy Policy, click here.

Please contact us at sales@srsacquiom.com if you have any questions, or would like to learn more about Acquiom Clearinghouse.

Is E-sign enforceable in every state?

Yes. Clearinghouse is in compliance with the federal e-sign act as well as the Uniform Electronic Transactions Act at the state level.

What makes Acquiom Clearinghouse™ E-signatures enforceable?

Immediately after we verify identity of a new user, he or she agrees to our standard terms and conditions, which contain the typical e-sign provisions from the E-Sign Act.  When users later e-sign, they type in their email and password, which satisfies the concept of “intent to sign” (i.e. a party must do an affirmative act when e-signing to show intent, like type in name or password or click a button, etc.)

Before that, we execute processes to comply with the UETA regarding signer attribution (E-Sign Act does not address this).  UETA states that a signature is attributable to a person if it is an act of that person (including the actions of his or her human or electronic agent), and that act may be shown in any manner. If a security procedure is used, its efficacy in establishing the attribution may be shown. Typical deployments verify the signer’s identity using an email address as a unique identifier, but additional methods are available, including a one-time password or knowledge based authentication.

We send an invitation to an email contact provided by the buyer or seller.  This email address is used as a unique identifier and then the user goes through knowledge-based authentication to establish that we are dealing with the proper party.

How does payments administration work?

Before a merger, the parties engage SRS Acquiom to serve as escrow and payments administrator and the escrow bank of their choosing to serve as a depository and independent escrow agent through a single engagement process and agreement – all seamlessly coordinated by SRS Acquiom. At closing, buyers simply wire the merger consideration to accounts at the escrow bank that are then disbursed or held in escrow in accordance with the terms in the merger agreement. The merger parties provide closing instructions via a flow of funds spreadsheet. SRS Acquiom administers all shareholder and third-party payments while the escrow bank securely holds, invests and releases escrow funds pursuant to the terms of the agreement.

SRS Acquiom’s services include managing the letter of transmittal collection process, electronic distribution of proceeds, payments of closing transaction expenses to third parties, tax reporting, lost shareholder investigation, and (if some shareholders are never found) escheatment compliance services. Simplified processes and experienced M&A professionals save merger parties significant time, expense and hassle, and the top-tier banks we work with ensure the neutrality needed from an escrow bank for releasing funds. Distributions to shareholders or third parties are made only upon written instruction from the merger parties, and, with respect to releases of escrow funds, only after the escrow bank has determined that it is proper to do so.

Contact us at sales@srsacquiom.com to learn more.

How does SRS Acquiom improve the reliability and accuracy of data used for processing payments?

One important reason why our online platform, Acquiom Clearinghouse™, improves the reliability and accuracy of data used for processing payments is because shareholders enter data directly into the payments system and validate its accuracy.  There are no errors introduced by third parties transcribing data from paper to system.

Contact us at sales@srsacquiom.com to learn more.

Where do I find the certificate number if I don’t have a physical certificate?

Acquiom Clearinghouse™ uses one of your certificate numbers and the corresponding number of shares to confirm your identity when creating your Acquiom Clearinghouse account. If you were not issued a physical certificate by the selling company, you were probably given an investment confirmation via email or a letter that indicates the certificate number, or a number resembling a serial number, for the shares issued to you. If you did not receive anything with this information, please contact the selling company’s finance, legal, or securityholder relations team to obtain your certificate number and corresponding number of shares represented by that certificate. The selling company’s transfer agent may also be a resource for obtaining this information.

If you were issued a physical certificate, but have lost it and the information that was on it, please contact the selling company’s finance, legal, or securityholder relations team to obtain your certificate number and corresponding number of shares represented by that certificate.

If you have any questions, please contact us at support@srsacquiom.com.

Are SRS Acquiom and the escrow bank independent?

Yes.  SRS Acquiom works with top-tier banks and financial institutions to design and deliver improved escrow solutions, but SRS Acquiom and the banks are not affiliated in any other way. Acquiom Administration LLC acts as escrow and payment administrator on behalf of the parties in merger and acquisition transactions. Acquiom’s key points of difference largely center around M&A expertise and efficiency, including functions such as the simplifying required forms, speeding up response, timeliness and avoidance of delays in issuing payments, and proactively contacting un-presented shareholders. In short, SRS Acquiom’s team greatly improves the administrative aspects of the escrow and payments process, and the escrow bank ensures the neutrality needed when releasing funds.

SRS Acquiom never holds or takes possession of merger consideration; funds are held by the escrow bank as trust funds, or moved to depository accounts when available for distribution to shareholders. Neither SRS Acquiom nor any SRS Acquiom affiliates is, or is acting in the capacity of, a bank or money transmitter. SRS Acquiom and the escrow bank have extensive interaction throughout the post-closing process while ensuring seamless delivery of services, but each performs its role independently of the other. Clients get the best of both worlds: a dedicated administrator staffed by M&A specialists who provide an exceptionally high level of service and a top-tier banking institution that holds funds securely and provides highly efficient treasury and electronic payment services.

Contact us at sales@srsacquiom.com to learn more.

What do I do with my certificate?

While Acquiom Clearinghouse™ does not require the submission of your physical certificate, it is recommended that you mark it cancelled and then keep the original for your records.  Once you have received final payment, you may destroy it or keep it for your files. If a payment administrator other than SRS Acquiom is overseeing your transaction, please refer to your Letter of Transmittal and accompanying documentation for instructions, as many other payment administrators require that certificates be mailed in before you will receive your closing payment.

If you have any questions, please contact us at support@srsacquiom.com.

Must I use Acquiom Clearinghouse™ to complete my Letter of Transmittal?

Acquiom ClearinghouseTM is a secure, online platform where you complete your Letter of Transmittal (LOT) in order to receive a payment related to your transaction for which SRS Acquiom has been hired as payments administrator. Completing your LOT through Acquiom Clearinghouse greatly increases the speed at which you receive payment, but you may opt to complete the process offline as well. Simply refer to the unique URL you received via email to setup your Acquiom Clearinghouse account to download and print a paper copy of your LOT.

If you have any questions, please contact us at support@srsacquiom.com.

Will my certificate have any value after closing?

A physical security certificate will not have any value after closing, but you should not transfer it, or allow it to be possessed by others. While Acquiom Clearinghouse™ does not require the submission of your physical certificate, it is recommended that you mark it cancelled and then keep the original.  Once you have received final payment, you may destroy it or keep it for your files. If a payment administrator other than SRS Acquiom is overseeing your transaction, please refer to your Letter of Transmittal and accompanying documentation for instructions, as other payment administrators may require that certificates be submitted before you will receive your closing payment.

If you have any questions, please contact us at support@srsacquiom.com.

Services: Enhanced Escrow (4)

What is Acquiom Enhanced Escrow?

Acquiom Enhanced Escrow offers solutions from top-tier banks that are designed to make closing a transaction simple, and to deliver higher yields and immediate liquidity. Funds are held and managed by SunTrust Bank and Capital One Bank, independent institutions that rank among the top U.S. M&A escrow banks in financial strength.

Serving as escrow administrator, SRS Acquiom assists with opening accounts, reviewing governing documents, collecting signatures and administering payment instructions.  Our team is skilled at working with counsel throughout, making the whole process easier. Our online payments administration platform, Acquiom Clearinghouse™, makes closing a transaction even more efficient and hassle-free.

Contact us at sales@srsacquiom.com to learn more.

How can SRS Acquiom be as neutral as a typical escrow bank?

SRS Acquiom works with top-tier banks and financial institutions to create a comprehensive payments administration and escrow service solution. The escrow bank will release escrow funds only upon receipt of joint written instructions from both the buyer and seller’s representatives — standard practice in all escrow and paying agent contracts. This ensures the neutrality of this key part of the process. As the merger parties have requested, SRS Acquiom facilitates the administrative side of payments to shareholders only after the escrow bank has independently determined that it is proper for the money to be released. SRS Acquiom allows the shareholder representative to remain independent of the payment process, except when discharging its duties to consent to releases and to provide joint instructions.

SRS Acquiom’s key points of difference center around M&A expertise and efficiency. These include functions such as simplifying required forms, speeding up response, timeliness and avoidance of delays in issuing payments, and proactively contacting un-presented shareholders. SRS Acquiom’s team dramatically improves the administrative aspects of the escrow and payments process, and top-tier financial institutions ensure the neutrality needed when releasing funds.

Contact us at sales@srsacquiom.com to learn more.

How is it possible for SRS Acquiom to provide better service and improved escrow economics while charging fewer fees?

Acquiom Enhanced Escrow reduces costs by improving efficiency in the entire M&A post-closing process and by economies of scale generated through the large volume of merger deals on which SRS Acquiom is engaged.  The insights from extensive experience with escrow claims allow for better asset management of escrow funds. SRS Acquiom has been able to negotiate favorable escrow and banking services terms with top-tier banks, and these are then shared with the merger parties through lower engagement fees and favorable deposit interest rates.

Contact us at sales@srsacquiom.com to learn more.

Are SRS Acquiom and the escrow bank independent?

Yes.  SRS Acquiom works with top-tier banks and financial institutions to design and deliver improved escrow solutions, but SRS Acquiom and the banks are not affiliated in any other way. Acquiom Administration LLC acts as escrow and payment administrator on behalf of the parties in merger and acquisition transactions. Acquiom’s key points of difference largely center around M&A expertise and efficiency, including functions such as the simplifying required forms, speeding up response, timeliness and avoidance of delays in issuing payments, and proactively contacting un-presented shareholders. In short, SRS Acquiom’s team greatly improves the administrative aspects of the escrow and payments process, and the escrow bank ensures the neutrality needed when releasing funds.

SRS Acquiom never holds or takes possession of merger consideration; funds are held by the escrow bank as trust funds, or moved to depository accounts when available for distribution to shareholders. Neither SRS Acquiom nor any SRS Acquiom affiliates is, or is acting in the capacity of, a bank or money transmitter. SRS Acquiom and the escrow bank have extensive interaction throughout the post-closing process while ensuring seamless delivery of services, but each performs its role independently of the other. Clients get the best of both worlds: a dedicated administrator staffed by M&A specialists who provide an exceptionally high level of service and a top-tier banking institution that holds funds securely and provides highly efficient treasury and electronic payment services.

Contact us at sales@srsacquiom.com to learn more.

Clients: Contact Information (1)

How do I update my contact information?

If you have any changes to your contact or payment information, please complete this form and SRS Acquiom will update our records, as well as those on file with the escrow bank and/or payment administrator party to your transaction.

For any other questions, please contact us at support@srsacquiom.com.

Clients: Escrow Accounts (6)

What is an escrow fund and why were proceeds held back in this account?

At closing, the buyer may deposit a portion of the purchase price into an escrow fund that is established so the buyer will be able to recover money that may be due to it under the merger agreement without filing a lawsuit. A buyer may be entitled to the money in escrow for a variety of reasons. For instance, the buyer could suffer damages if something represented as true by the selling company turns out to be false.

Residual funds are distributed to securityholders according to their pro rata share of the escrow after the scheduled escrow expiration date.  A typical timeline for the distribution of funds after an escrow expires can be found here.

Escrow funds cannot be released (and an escrow account cannot be closed) until the pre-determined escrow expiration date, as escrows do not represent guaranteed funds.  They are similar to a check that hasn’t cleared; the money is not available even though you can often see it in your account.

Please contact us at support@srsacquiom.com with any additional questions.

What is the difference between a “Paying Agent” and an “Escrow Agent”?

Generally, the buyer pays merger consideration, withholds taxes and completes tax reporting as required. In many deals, buyers hire paying agents to facilitate these processes. Paying agents will act as an exchange agent, verify ownership, collect shareholder payment instructions, and receive W-9 or W-8 tax forms.

Issues can arise when the parties decide to use an escrow agent that is not the paying agent, or they establish accounts with different divisions of the same bank. The escrow banking relationship is a separate legal relationship from the paying agent relationship – even when the same bank is performing both roles. The paying agent agreement is typically only between the buyer and the bank. The escrow relationship is a three-way relationship between the buyer, the shareholder representative and the bank. For customers’ security, banks do not share information between accounts. Because of this, escrow agents often need to re-collect payment instructions from each shareholder and also independently gather tax forms. In cases where the escrow agent isn’t the exchange agent, it could be unsure if all shareholders have submitted their share certificates and letters of transmittal to participate in the M&A transaction. Having to re-verify and re-collect this information may delay payments.

Please contact us at support@srsacquiom.com with any additional questions.

How are expense funds held by SRS Acquiom?

All client expense funds are held on deposit at highly rated banks in normal depository accounts with daily funds availability. Client funds are not invested in securities, such as commercial paper, bonds or stocks. Furthermore, SRS Acquiom structures clients’ expense funds in a way that allows our clients to get the full benefit of pass-through FDIC insurance, providing risk coverage of up to $250,000 per beneficial owner. So while a specific expense fund might be $1 million, if the largest shareholder owned only 20% of the company, then all shareholders would be 100% covered by FDIC insurance.

For any other questions, please contact us at support@srsacquiom.com.

What are these “expenses paid” from my escrow?

“Expenses paid” are deductions from an expense fund that is set aside out of the purchase price at closing for expenses that might be incurred during the post-closing period. Such costs typically include legal or accounting fees that are incurred to protect shareholders’ interests when a dispute about the escrow arises.

Please contact us at support@srsacquiom.com with any questions.

What is “Interest Earned” on my escrow, and how is it calculated?

The escrow bank manages the interest for funds held in the escrow account.  In some cases as the shareholder representative, SRS Acquiom does not directly receive information regarding the rate of interest accrual, but rates are typically in line with market offerings. If you would like to know the interest rate or any other information pertaining to funds held back after closing, please contact us at support@srsacquiom.com for assistance.

Will escrow deposits be available when needed?

The escrow funds are available to the merger parties when there is a payout required under the merger agreement. There are no delays, and no advance notice required. The seller and buyer parties maintain the same level of control over disbursements from the escrow.

Please contact us at support@srsacquiom.com with any additional questions.

Clients: General Information (11)

I received my closing payment, but less money than I was expecting. Why?

There are a few common reasons why you may have received less than you were expecting. First, some disbursements are subject to tax withholding. This could be caused by your status as an employee of the selling company, your failure to properly deliver to the escrow bank a W-8 or W-9 tax form as required, or a variety of other reasons. Second, it is very common for buyers to deposit a portion of the purchase price into an escrow fund. An escrow fund allows the buyer to recover money that may be due to it under the merger agreement without having to file a lawsuit in order to get it. A buyer may be entitled to money back for a variety of reasons. For instance, the buyer could suffer damages if something represented by the selling company turned out to be false. Residual funds remaining in escrow at the end of the term will be disbursed to former stockholders of the selling company according to their pro-rata portions.

A typical timeline for the distribution of funds after an escrow expires can be found here.

Please contact us at support@srsacquiom.com for any additional questions.

What is a claim and how does it impact my escrow?

A claim is an issue brought forth after closing by the buyer or a third party. Claims can be the result of a perceived breach in the representations and warranties outlined in the transaction agreement.  When a claim is presented, a dollar amount is specified and that amount of the escrow must be set aside until the claim is resolved.  If the release date passes while there is still a pending claim, the remaining money will be distributed accordingly within 7-10 business days of the release date.  Once the claim is resolved (and assuming there are funds still to be distributed from the money set aside), a new release will occur and funds from the secondary release will be distributed within approximately 7-10 business days of the claim resolution. Your revised release amount is based on your pro-ratas as stated in the transaction agreement.

To view a typical escrow release timeline, click here.

Please contact us at support@srsacquiom.com with any additional questions.

What is a Purchase Price Adjustment (PPA) or Working Capital Adjustment?

A purchase price adjustment (PPA) is a mechanism used by parties in private-target M&A transactions to confirm or true-up the value of the target business at closing. In most M&A transactions, the purchase price offered by the buyer is determined in part on the target company’s most recently prepared financial statements (usually from the end of the most recent quarter or fiscal year). Most PPA’s are based on categories such as working capital, net worth (or net assets) and EBITDA. In some deals, the buyer may adjust the purchase price based on the occurrence or non-occurrence of certain events (for example, if the closing does not occur by a drop dead date).

A working capital adjustment is a type of PPA that occurs when a PPA is based on the working capital (current assets minus current liabilities) of the target company, or a similar formula such as cash, net cash, or other related measurement.

Please contact us at support@srsacquiom.com with any additional questions.

What is a Letter of Transmittal (LOT)?

The Letter of Transmittal (LOT) is used to exchange your securities in the selling company for merger consideration (i.e. the monetary value of your shares). The LOT is usually sent by the selling company’s counsel, the escrow bank, or the appointed payments administrator (e.g., SRS Acquiom) following the close of the deal.

For transactions administered by SRS Acquiom, you can request a copy of your LOT by contacting us at support@srsacquiom.com.

Where do I find the certificate number if I don’t have a physical certificate?

Acquiom Clearinghouse™ uses one of your certificate numbers and the corresponding number of shares to confirm your identity when creating your Acquiom Clearinghouse account. If you were not issued a physical certificate by the selling company, you were probably given an investment confirmation via email or a letter that indicates the certificate number, or a number resembling a serial number, for the shares issued to you. If you did not receive anything with this information, please contact the selling company’s finance, legal, or securityholder relations team to obtain your certificate number and corresponding number of shares represented by that certificate. The selling company’s transfer agent may also be a resource for obtaining this information.

If you were issued a physical certificate, but have lost it and the information that was on it, please contact the selling company’s finance, legal, or securityholder relations team to obtain your certificate number and corresponding number of shares represented by that certificate.

If you have any questions, please contact us at support@srsacquiom.com.

What do I do with my certificate?

While Acquiom Clearinghouse™ does not require the submission of your physical certificate, it is recommended that you mark it cancelled and then keep the original for your records.  Once you have received final payment, you may destroy it or keep it for your files. If a payment administrator other than SRS Acquiom is overseeing your transaction, please refer to your Letter of Transmittal and accompanying documentation for instructions, as many other payment administrators require that certificates be mailed in before you will receive your closing payment.

If you have any questions, please contact us at support@srsacquiom.com.

What is a release date?

An escrow release date, or escrow expiration date, is the last date on which new claims may be made by the buyer against the amount in the escrow fund. It is not the day that money is actually released to securityholders.  Since claims can be made up until the last minute, the process (see a typical escrow release timeline here) to release funds to shareholders (assuming there are no pending claims) does not begin until the day following the release date.  There is a small delay before the disbursement of funds as the escrow bank completes the process of getting final confirmation from the parties and sending the applicable checks and wires. The process leading up to distribution typically takes 7-10 business days.

Please contact us at support@srsacquiom.com with any additional questions.

If I’ve submitted materials to SRS Acquiom, why might I have to resubmit them to the escrow bank?

While the paying agent agreement is generally between the buyer and the paying agent, the escrow relationship is a three-way relationship between the buyer, the shareholder representative and the bank. Banks generally do not share information between accounts, particularly when the account holders are not identical. Because of this, escrow agents often need to re-collect payment instructions from each shareholder and also independently collect and review tax forms. If the escrow agent did not serve as the exchange agent, it may not know whether all shareholders have submitted their share certificates, executed the Letters of Transmittal (LOTs) and/or fully completed the exchange process. SRS Acquiom works to avoid this, as having to re-verify and re-collect this information can delay payments.

Please contact us at support@srsacquiom.com with any additional questions.

Why is the price per share different than what I anticipated?

SRS Acquiom manages the post-closing payment process of your deal and is not privy to the negotiations pre-closing, which would determine the price per share for all shareholders.  If the selling price is different than what you expected, it could be a result of a negotiation between the board of the selling company and the buyer.  The final purchase price can also be impacted by payment obligations to third parties, accounting adjustments, the application of liquidation preferences, the treatment of any escrow or other accounts, and similar factors.  For more information on the final selling price for your specific transaction, please contact the selling company or selling counsel.

Please contact us at support@srsacquiom.com for any additional questions.

What is Rep and Warranty Insurance? How and why should it be used?

Representation and Warranty Insurance (RWI) has been in the marketplace for some time but is not used in many merger transactions. At a high level, the product provides insurance against certain indemnifiable losses that may be incurred if there has been a breach of a representation or warranty. The insurer takes a fee in exchange for assuming the risk of such loss. Often, the insurance will provide excess coverage only in the event that losses are greater than the escrow amount or will insure only against certain types of claims (such as environmental or intellectual property matters).

Please contact us at support@srsacquiom.com with any additional questions.

 

What is Entity Management?

When an Asset Sale is done, there remain many tasks to be completed in order to wind down the entity during the escrow period. Shareholder Representative Services (SRS) will manage all of those key events to keep the shell company alive, then shut it down once the escrow period expires.

Please contact us at sales@srsacquiom.com to learn more.

 

Clients: Payment Information (5)

How do I update my payment information with SRS Acquiom and/or the escrow bank?

If you have any changes to your contact or payment information, please complete this form and SRS Acquiom will update our records, as well as those on file with the escrow bank and/or payment administrator party to your transaction.

Please contact us at support@srsacquiom.com or 415.263.9018 with any questions.

Click here for a typical escrow release timeline.

If my payment is considered compensation, will there be income and/or payroll tax withholding?

Yes, if your payment is considered to be compensation, which is often the case for payments made in respect of incentive stock options for example, your payment is likely subject to applicable income and/or payroll tax withholding deductions. In some cases, the payroll department for the company will make these calculations prior to issuing your payment. Whether SRS Acquiom has information about the withholding calculations depends on our role in your transaction. If we are shareholder representative only, we are not likely to have this information. If Acquiom® Compensation Payments has been selected to administer payments, then we will be making these calculations and will have the information.

Click here for a typical release payment timeline.

If you have any questions, please contact us at support@srsacquiom.com.

 

The escrow period has ended. Why haven’t I received my payment?

The date of the escrow period’s expiration, commonly referred to as the release date or the escrow expiration date, is the last date on which the buyer can make claims against the escrow. Funds remaining in the escrow at the expiration date may continue to be held in escrow if the buyer made claims prior to expiration that have not yet been resolved. Money will be disbursed either to the buyer or the former stockholders as soon as such claims are finally determined.

Additionally, even if no claims have been made, there is a short delay between the escrow expiration date and the date of the disbursement of funds as the escrow bank completes its process of getting final confirmation from the parties and sending the applicable checks and wires. A typical timeline for the distribution of funds after an escrow expires can be found here.

Please contact us at support@srsacquiom.com with any additional questions.

How will I be paid after my escrow release?

The method of payment for an escrow release is negotiated between the buyer and the escrow bank, and outlined in the Escrow Agreement. Most escrow banks typically distribute the escrow funds via the method used for your closing payment, unless you have provided an update to your instructions.  Some escrow banks will only complete payment using a certain method, so your escrow payment will not always match your closing payment. Click here for a typical escrow release timeline.

To update your contact information or payment instructions, please complete this form.

If you have any questions, please contact us at support@srsacquiom.com.

What types of payments might I receive in relation to my transaction?

Payments from an Escrow Account (Interim and Final): An escrow account is established at closing and is funded from a portion of the purchase price. The account is held with a neutral third party (e.g., an escrow bank) to be used as a source of payment to the buyer in the event the buyer becomes entitled to indemnification. After a specified period of time (the survival period) the balance of the escrow account is paid to the selling shareholders. Some transactions may include interim escrow releases, which distribute a portion of the escrow at pre-determined times prior to the end of the survival period, subject to any claims against the escrow.

Payments from a Buyer Holdback (Interim and Final): A holdback is a portion of the purchase price that is withheld by the buyer to used as a source of payment to the buyer in the event the buyer becomes entitled to indemnification. After a specified period of time (the survival period) any unused portion of the holdback account is paid to the selling shareholders. Some transactions may include interim holdback releases, which distribute a portion of the holdback at pre-determined times prior to the end of the survival period, subject to any claims against the funds.

Payments from a Purchase Price Adjustment: Many merger agreements provide for an adjustment to the purchase price shortly after the closing. The most common type of purchase price adjustment is a working capital adjustment. This occurs when the actual working capital (current assets minus current liabilities) of the target company is higher or lower than the amount of working capital that was estimated at the time of closing. While the timing of these adjustments vary from deal to deal, an adjustment usually occurs within 60 to 90 days after closing. In the event this adjustment results in a positive balance for securityholders, a working capital release will be processed.

Payments from an Earnout: An earnout is a provision stating that the selling securityholders will obtain additional purchase price if the seller or surviving company reaches certain milestones, such as revenue targets or receipt of regulatory approvals.

Payments from a Tax Refund: A tax refund payment is a distribution to former securityholders of a tax refund received by the target company.

Click here for a typical release payment timeline.

If you have any questions, please contact us at support@srsacquiom.com.

 

 

Clients: Tax Reporting (4)

Where do I get a copy of my 1099 (tax documents)?

The escrow bank or payment administrator managing your escrow will distribute 1099s by mail to the address they have on file. The escrow bank/payment administrator has until February 15th to distribute these documents, and will do so automatically when they are ready.

If you have any changes to your contact or payment information, please complete this form and SRS Acquiom will update our records, as well as those on file with the escrow bank and/or payment administrator party to your transaction.

For any other questions, or update your information, please contact us at support@srsacquiom.com.

What tax documents are necessary for employee shareholders?

In some transactions employee securityholders share in the proceeds of the merger. Paying employee securityholders in a merger can get confusing. When distributions are made at closing (or post-closing for escrow releases and earn-outs) some employees receive their payments through the paying agent while others receive payment from the buyer, and still others receive payments from both. To add to the complexity, some employees get 1099-Bs while others receive W-2 tax forms, even after they leave the company.

To determine what tax documents you require, please contact us at support@srsacquiom.com or contact your company’s payroll administrator.

 

How do I determine the cost basis for my investment?

SRS Acquiom only manages the post-closing payment aspects of the transaction; we are not privy to any details regarding the cost of your security.  We suggest contacting the legal counsel or other members of the management team for the company in which you invested.  Should you have questions about the tax implications associated with the cost basis, we recommend you consult your personal financial advisor, tax accountant, or lawyer, as there are a variety of different factors that can impact tax liability.

Please contact us at support@srsacquiom.com with any additional questions.

Where can I find a Form W-9 and/or Form W-8BEN?

The most current blank W-9s, W-8BENs, and other tax documents can be found on the IRS.gov website. If you need any assistance with selecting the correct form or completing your form, please contact us at support@srsacquiom.com with any questions.

About SRS Acquiom (6)

Who is SRS Acquiom?

SRS Acquiom takes the headache out of M&A transactions. We offer a full suite of closing and post-closing solutions including escrow, transactional risk, payments administration and shareholder representation. Our solutions are designed with the flexibility to meet the unique needs of each deal. Founded in 2007 to solve pain points felt by individual shareholder representatives, SRS Acquiom continues to seek more efficient and simple ways to get M&A deals done.srsacquiom.com

Contact us at sales@srsacquiom.com to learn more.

 

What do you mean by stating you offer “industry-leading” services?

When we say we offer “industry-leading” services, we mean we are the industry’s leading provider of M&A post-closing services. We consistently close more deals per year than any competitor. As the industry leader, we also support the industry by publishing a wide array of annual data studies and publications used to shape industry best practices.

What do you mean by the statements, “maximizing deal value” and “maximized return”?

As professional shareholder representatives, we work hard to give shareholders the maximum value in their closing.  We have negotiated and litigated thousands of indemnification claims, earn-out disputes, purchase price adjustments, tax reviews, and escrow distributions. That’s important because two-thirds of M&A transactions have material post-closing issues. As a direct result of our experience, we have won a 69% reduction in the value of contested claims against escrow, saving shareholders $453 million or over 20x our fees.

What do you mean you offer services that yield “better economics”?

In all the services we offer, our team of professionals works hard to yield economic results that exceed client expectations. Inefficiencies cost merger parties countless hours and billions of dollars each year. We’re solving this by offering new services that make closing M&A transactions faster and simpler. To learn more on this topic, read our white paper, “Solving for Administrative Inefficiencies in M&A.”

What is SRS Acquiom’s experience in the industry?

SRS Acquiom is the industry leader in providing innovative M&A closing and post-closing services and offers a full suite of services, including escrow, transactional risk, payments administration and shareholder representation.

Our solutions are designed with the flexibility to meet the unique needs of each deal. Founded in 2007 to solve pain points felt by individual shareholder representatives, SRS Acquiom continues to seek more efficient and simple ways to get M&A deals done.

We work with hundreds of venture capital and private equity clients, have represented over 130,000 securityholders in 100 countries, have been engaged on over 1,400 transactions with over $234 billion in aggregate deal value, and disbursed payments in excess of $40 billion.

The SRS Acquiom staff of 100 experts — corporate and litigation attorneys, forensic accountants, valuation experts, tax professionals, employment experts, and client support specialists — is the most experienced team ever assembled for M&A post-closing management.

Contact us at sales@srsacquiom.com to learn more.

What level of service can I expect from SRS Acquiom?

SRS Acquiom serves as a single point of contact for customers to make the post-closing process easier. As the shareholder representative, Shareholder Representative Services (SRS) handles any claims that the buyer or others may make, in order to protect the selling securityholders’ interests in the escrow fund or holdback. In addition to managing any disputes, SRS serves as the primary point of contact for any questions one may have as a securityholder. SRS ComPort™ is a secure online site where you can see your escrow balance statements, receive news and other developments pertaining to your transaction, find frequently asked questions, and use many other helpful features. See a demonstration by visiting SRS ComPort™.

SRS Acquiom’s onboarding team consists of seasoned M&A attorneys who understand M&A hours.  Our goal is to provide thoughtful comments on merger documents and focus attention on only the most material issues (should there be any).

The post-closing process is even simpler when escrow solutions are combined with our payments administration service, Acquiom Clearinghouse. Buyers wire funds to two accounts and are done. Shareholders use a redesigned, more intuitive online Letter of Transmittal to easily confirm holdings, select a payment method and provide necessary account information in minutes. Buyers get daily reports. Attorneys encounter far fewer administrative hassles.

Contact us at sales@srsacquiom.com to learn more.

Services: Escrow Shield Plus (33)

Who is the Escrow Agent when Escrow Shield Plus™ is used?

The funds are held and managed by AXA Equitable, acting as an independent financial institution. SRS Acquiom (specifically, Acquiom Clearinghouse LLC) acts as escrow administrator to assist with administrative matters such as opening accounts, reviewing governing documents, collecting signatures, and administering payment instructions. SRS Acquiom serves as point of contact with customers. Funds cannot be released or transferred without joint written instructions as specified in the Escrow Shield Plus Agreement and the Escrow Administration Agreement.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What’s different about the process of opening an Escrow Shield Plus™ account compared to a typical escrow account at a bank?

The process and documentation for opening an Escrow Shield Plus account and a typical escrow account at a bank are similar. With a bank, parties select an investment option such as a Money Market Deposit Account (MMDA) or Money Market Fund (MMF). With Escrow Shield Plus, the parties elect to invest the funds in an insured, collateralized separate account via a funding agreement, the Escrow Shield Plus Agreement (described below).

There are two key documents:   

Escrow Shield Plus Agreement – this is similar to the investment election form for a traditional escrow deposit, and it states the terms applicable to the product. This product has been registered with the U.S. Securities and Exchange Commission (SEC). As such, terms are not subject to negotiation, as would be the case for investment options elected for traditional escrows.  The agreement offers a competitive crediting rate (interest rate) and is collateralized by a separate account that holds the invested funds. The crediting rate may change under limited, defined circumstances.

Escrow Administration Agreement – this agreement covers the terms of the account administration and is similar to the traditional Escrow Agreement. This covers topics such as joint instructions, notices, indemnification, statements, etc. Terms are negotiable, and the agreement is signed by Buyer, the Shareholder Representative and Acquiom Clearinghouse LLC as the escrow administrator.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What is the Escrow Shield Plus™ Agreement?

In general terms, a funding agreement is an investment product offered by an insurance company.  Escrow Shield Plus is a tailored funding agreement designed specifically for the investment of M&A escrows and could replace the need for a traditional escrow.  It offers a competitive investment earnings rate called the crediting rate. The crediting rate may change under limited, defined circumstances.

The funding agreement states that the escrow funds will be placed into a separate account that contains a portfolio of diversified securities, and is guaranteed against loss by a principal guarantee by AXA Equitable, a highly rated insurance company. Guarantees are based on claims paying ability of AXA Equitable.  The assets in the separate account are collateral against AXA Equitable’s obligations.  Escrow Shield Plus could replace the need for a traditional bank escrow account in order to satisfy potential indemnification claims in M&A transactions.

See Escrow Shield Plus overview and prospectus for more information.

See About AXA Equitable for information on AXA Equitable credit ratings.

Contact us at sales@srsacquiom.com to learn more.

How quickly can I access my Escrow Shield Plus™ funds if needed?

All Escrow Shield Plus distributions contemplated under the merger agreement are available for liquidity on demand, including payments to satisfy any indemnification claims or upon any scheduled release. This means that upon receipt of joint written instructions, funds paid in satisfaction of claims are disbursed generally no later than the next business day. Funds paid to the Buyer go directly to the Buyer, and funds paid to other parties will be released from AXA Equitable to the paying account for further processing.  The timing of these payments to other parties depends on the number of payees and type of payment, but payments are generally released within two business days upon receipt of joint written instructions.

Liquidity limitations apply if early termination is requested. See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How quickly are releases made if SRS Acquiom is not the payments administrator?

In order to determine how quickly an alternate payments administrator distributes releases, you should refer to the Service Level Agreement (SLA) of the hired paying agent.  In any event, the release of funds at maturity by AXA Equitable to a designated paying account will be done next-day.

Liquidity limitations apply if early termination is requested. See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What is the regulatory Know Your Customer (KYC) process and the Anti-Money Laundering (AML) compliance process for Escrow Shield Plus™?

We must comply with applicable laws related to Know Your Customer (KYC) and Anti Money Laundering (AML). We have taken steps to make this process as painless as possible within the requirements of applicable laws. 

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How does Escrow Shield Plus™ create the opportunity for higher yields?

M&A escrow agreements call for disbursements whenever liquidity is required under the merger agreement. The vast majority of escrows are invested in financial products that provide overnight liquidity, i.e. bank money market deposit accounts and money market funds. However, these products were designed for other purposes and generally do not consider the actual behavior of M&A escrows. M&A escrows actually behave as short-term (on average 18-month) money, and rarely require overnight liquidity.

The opportunity for higher yields is made possible with Escrow Shield Plus because funds held in the separate account are invested in a custom-built portfolio actively managed within the liquidity parameters of the underling escrows. This allows for investment in longer duration securities that generally pay higher interest rates than traditional deposit or money market accounts. This investment solution is designed specifically for M&A escrow accounts, and SRS Acquiom holds a patent for the underlying method. Interest accrued is protected by the principal guarantee.

The crediting rate may change in limited, defined circumstances. Guarantees are based on the claims paying ability of AXA Equitable.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

If using Escrow Shield Plus™, how is the money invested?

AXA Equitable places the funds in an insulated separate account that is sheltered from other credit or policyholder obligations arising from AXA Equitable’s other businesses. The funds in the separate account are invested in securities such as short-term government securities and investment grade obligations issued by large corporations. These investments provide the separate account with a return that allows AXA Equitable to credit a particular rate of interest to contract holders. The crediting rate may change in limited, defined circumstances.

The principal guarantee provided by AXA Equitable is fully collateralized by the assets of the separate account. AXA Equitable has agreed that as regards the separate account, assets held in the separate account together with the assets held in AXA Equitable’s general account that support their contractual commitment will at all times meet or exceed liabilities. Guarantees are based on the claims paying ability of AXA Equitable.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Who makes investment decisions on the portfolio held in the separate account?

AXA Equitable actively manages the monies held in the separate account in the Escrow Shield PlusSM Agreement. AXA Equitable places the funds in an insulated separate account that is sheltered from other credit or policyholder obligations arising from AXA Equitable’s other businesses. The separate account funds are invested in securities such as short-term government securities and investment grade obligations issued by large corporations. These investments provide the separate account with a return that allows AXA Equitable to credit a particular rate of interest to contract holders. The crediting rate may change in limited, defined circumstances.

See Escrow Shield PlusSM overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What is the crediting rate for an Escrow Shield Plus™ account? How and when can the crediting rate change?

The crediting rate is the earnings rate paid to the merger parties for investments in Escrow Shield Plus and is set by AXA Equitable. Crediting rates for new contracts are updated on a weekly basis.  These become effective every Tuesday at 1pm ET.

As is the case with most financial products such as bank deposits, the applicable crediting rate is subject to change. Most products offering immediate or overnight liquidity adjust earnings rates daily based on the performance of the portfolio (in the case of Money Market Funds or MMFs) or based on the deposit needs of the bank (in the case or Money Market Deposit Accounts of MMDAs). With Escrow Shield Plus, AXA Equitable will change the crediting rate on existing deposits only in limited, defined circumstances as described below. Once money is placed into the product, the crediting rate can change as often as quarterly, but only if one of the following contingencies applies.

Claims Rate Adjustment. Excessive claims submitted by the buyer could reduce the crediting rate for the remaining duration of the contract. This does not impact accrued interest already earned as of such time.

Subsequent deposits into the separate account. The crediting rate may be adjusted downward upon the receipt of subsequent funds because crediting rates that apply to new funds are adjusted on a weekly basis. A blended rate applies. Note that the parties have the option of placing additional funds in new funding agreements rather than adding investments to the existing funding agreement.

Pooled Rate Adjustment. AXA Equitable may declare a Pooled Rate Adjustment to counteract a loss in the market value of an asset held in the separate account that is due to the issuer of the asset either defaulting on its obligations or experiencing a downgrade. AXA Equitable may also declare a Pooled Rate Adjustment if it anticipates that an issuer will default on its obligations due to creditworthiness and AXA Equitable sells the asset of the issuer to avoid further losses. AXA Equitable will not declare a Pooled Rate Adjustment due to a change in market value of a separate account asset that is solely the result of a change in market conditions, such as a spike in interest rates.

While the crediting rate could be reduced in these limited circumstances, the principal balance is guaranteed.  The only circumstance in which it could be reduced is if the parties decide to voluntarily terminate the contract early for a reason unrelated to the satisfaction of a claim or otherwise related to the M&A agreement.  This is similar to the penalty that could be assessed for early withdrawal in a fixed time deposit and is necessary because AXA Equitable will invest the proceeds based on the projected needs of the deposit as a part of an overall investment pool.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How does the principal guarantee work with Escrow Shield Plus™?

The return of the principal amount (net of any valid claims) and any accrued interest is guaranteed by AXA Equitable. In that, should there be any loss on the assets of the separate account, AXA Equitable is obligated to make the investors whole on invested capital and any accrued interest.  This guarantee is secured by the assets in the separate account as well as backed by AXA Equitable’s general account. Guarantees are based on claims paying ability of AXA Equitable.

Invested assets are held in a separate account that is segregated from AXA Equitable’s other assets. The separate account is insulated from any claims that other creditors and policyholders might have against AXA Equitable’s general account. This is in contrast to bank deposits in which the depositor is an unsecured creditor of the bank, subject to the limited protection of FDIC insurance.

There is no risk of floating Net Asset Value (NAV) reducing the size of principal.  New rules take effect October 2016 (escrow accounts established in 2015 and thereafter can be affected) which could require that institutional prime money market funds will no longer be carried at a stable net asset value and therefore could have a risk of loss of principal.  

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How does the separate account with Escrow Shield Plus™ mitigate risk and provide principal protection?

AXA Equitable guarantees that as regards the separate account, assets held in the separate account together with the assets held in AXA Equitable’s general account that support their contractual commitment will at all times meet or exceed liabilities. Guarantees are based on the claims paying ability of AXA Equitable.

AXA Equitable cannot use this separate account to meet its obligations elsewhere.  As stated in the Escrow Shield Plus Agreement Section 1.2, “The Separate Account assets are held separate from other assets of AXA Equitable, are dedicated to support the guarantee of AXA Equitable hereunder and will not be used for any liabilities arising out of any other business of AXA Equitable.”

Also, the separate account assets cannot be claimed by any of AXA Equitable’s other creditors.  Per the Escrow Shield Plus Agreement Section 1.2, “In the event AXA Equitable is found by a court to be insolvent, the Buyer and Shareholder Representative will have a claim against the assets of the Separate Account, which is segregated from the assets of AXA Equitable’s general accounts and insulated from the claims that other creditors may have against such general accounts.”

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What is AXA Equitable’s financial strength?

AXA Equitable Life Insurance Company (AXA Equitable) has consistently earned high marks from the independent companies that rate insurance companies for their financial strength and stability.  AXA Equitable remains focused on helping clients pursue their long-term goals by launching innovative new products and services, and by investing in state-of-the-art technology platforms and customer service initiatives. Innovative products, a strong balance sheet, disciplined risk management and conservatively managed assets are cornerstones of how AXA Equitable manages risk in meeting guarantees.

Guarantees provided in life insurance and annuity contracts are based on the claims-paying ability of AXA Equitable. For information about the financial strength of AXA Equitable, parties may review the company’s financial statements and/or check the company’s current rating with the independent sources that rate insurance companies for financial strength and stability. Such ratings are subject to change. Parties may also speak with their financial representative. 

For more infomration, please see About AXA Equitable or visit AXA Equitable’s website .

AXA Group is a worldwide leader in financial protection and asset management, with $585 billion in assets under management and 102 million clients worldwide. Clients include individuals and small, mid-size and large businesses that turn to AXA Group for a wide range of products and services to meet their insurance, protection, savings, retirement, investment management, and financial planning needs. AXA Equitable is the U.S. operating subsidiary of the global AXA Group.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Why has a large insurance company such as AXA Equitable entered this market?

AXA Equitable has a long history of innovation and entering new markets when it sees inefficiencies. Huge inefficiencies exist today in M&A escrows (see white paper), and as one of the leading insurance companies in the country, AXA Equitable is able to provide an insurance-based solution that incorporates SRS Acquiom’s patented methods and technology. AXA Equitable and SRS Acquiom have teamed together to address the challenges of traditional investment options for M&A escrows with a product that provides key benefits in response to a changing regulatory environment.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What exactly is SRS Acquiom’s role with respect to Escrow Shield Plus™?

SRS Acquiom serves as escrow administrator to make the process as simple to the merger parties as possible. Escrow Shield Plus is exclusively sold and distributed by Acquiom Financial LLC, a registered broker-dealer, member FINRA/SIPC  and affiliate of SRS Acquiom.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Why is no one else offering a service like Escrow Shield Plus™?

SRS Acquiom has extensive experience and data from transactions that have been collected since 2007. As a result, SRS Acquiom was uniquely able to see the opportunity for creating Escrow Shield Plus and has received a patent for a method of analyzing the behavior of prior escrows and applying the resulting data to invest on terms that apply to a pool of current transactions, while meeting the liquidity needs of the underlying funds. Because of our unique experience, the model is based on one of the most comprehensive databases of M&A escrow accounts ever assembled.

AXA Equitable insures against any losses on the fund. If there is an investment loss, AXA Equitable is obligated to protect fund investors against any resulting loss of principal. Guarantees are based on claims paying ability of AXA Equitable.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Who are parties to the Escrow Shield Plus™ Agreement?

The Buyer and the Shareholder Representative enter into the Escrow Shield Plus Agreement with AXA Equitable. Pursuant to that agreement, the Buyer agrees to fund the account, and the parties agree that funds cannot be released prior to stated expiration dates without joint written instructions.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What happens if the Escrow Shield Plus™ Agreement is terminated prematurely?

If the Escrow Shield Plus contract is terminated early due to a claim reducing the balance amount to zero, there is no penalty. The full amount of the account, including accrued interest, is released in full.

If the contract is terminated voluntarily for a reason unrelated to the merger agreement, a negative market value adjustment may apply. This is necessary because AXA Equitable makes longer duration investments at the time of entering into the funding agreement and the underlying assets could suffer a loss if liquidated early. AXA Equitable is willing to assume this risk for depletions resulting from claims but not for voluntary terminations unrelated to the merger agreement.

The market value adjustment, if any, may reduce the account balance of the contract, including the principal amount that is to be distributed to the appropriate parties upon the early termination of the contract.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Are there restrictions on who can participate in an Escrow Shield Plus™ Agreement?

Yes. In order to be eligible to purchase Escrow Shield Plus under applicable regulations, the Buyer must be domiciled in the U.S., and the Buyer must be formed under the laws of a state where the funding agreement has been registered with the applicable insurance regulators.  These states include California, Delaware, Illinois, Massachusetts, New York, Texas, and Washington; and the list may grow based on market demand. The Buyer must have a minimum of $25 million in assets in order to be eligible to enter into the contract. There is no minimum asset size required of the Seller.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Are there limits on the size of the Escrow Shield Plus™ contract?

Yes. The Buyer must make a minimum initial purchase payment (escrow size) of $1,000,000. The aggregate amount of payments into an escrow related to a single transaction may not exceed $50,000,000 without AXA Equitable’s approval.

However, these minimum and maximum limits for a new contract can be waived in certain circumstances, so please contact us to see if an exception can be made.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How quickly can an Escrow Shield Plus™ account be set up?

For qualifying deposits, setting up the account is easy and quick. The uncertain variable in many circumstances is the time required to satisfy the Know Your Customer (KYC) and Anti Money Laundering (AML) requirements of applicable law. These can vary depending on the nature of the party opening the account. For that reason, we ask that you give us as much advance time as possible, but SRS Acquiom’s goal is to establish all escrow accounts within a few business days.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How often do Escrow Shield Plus™ statements go out and to whom?

Electronic statements are sent by AXA Equitable directly to the parties of the Escrow Shield Plus Agreement (Buyer and Shareholder Representative).  Further reporting to the shareholders is the responsibility of the Shareholder Representative. In many cases the Shareholder Representative will be SRS Acquiom, and we send statements to all shareholders monthly. Prompt notices of distributions or account terminations are also sent by AXA Equitable.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

How will I know if the crediting rate has changed?

Any change in the crediting rate will be reflected in the statement provided by AXA Equitable. There is no advance notice of a change, but there is notice via email of occurrence of an event that produces a change — i.e. parties will know without having to wait for the next month’s statement. 

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What happens to the money earned via the crediting rate? Can I lose it?

Money earned via the crediting rate quarterly is guaranteed by and backed by the full balance sheet of AXA Equitable, a highly rated financial institution. Guarantees are based on claims paying ability of AXA Equitable. See About AXA Equitable for information on credit ratings of AXA Equitable.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What notifications are provided with Escrow Shield Plus™?

AXA Equitable will provide notice to the Buyer and the Shareholder Representative electronically. The types of events for which notification will be given include, but are not limited to, the following:

  • Processing of a claim;
  • Receipt of a subsequent purchase payment;
  • Change to a crediting rate due to a subsequent purchase payment, claims rate adjustment, pooled rate adjustment or extended maturity date; 
  • Termination of the contract; or
  • Maturity of a contract.

Electronic monthly statements will also be sent by AXA Equitable directly to the parties to the Escrow Shield Plus Agreement (Buyer and Shareholder Representative). Further reporting to the shareholders is the responsibility of the Shareholder Representative, and in many cases that is SRS Acquiom.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What are the fees charged for Escrow Shield Plus™?

On most deals, there are no explicit fees charged. This means that customers do not pay the setup fees, documentations fees and other miscellaneous fees that are charged for alternative escrow products. The distribution of any funds due under the contract can be made by electronic funds transfer at no cost. Additional charges may apply for alternative payment methods, mailings or similar service upgrades.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

If there are minimal or no fees charged, how do AXA Equitable and SRS Acquiom make money?

AXA Equitable and SRS Acquiom expect to earn more than the crediting rate on the investment of the assets. Any such additional earnings cover fees and expenses and provide compensation for the services provided. In other words, due to the efficiencies created over most alternative products, the fees are paid by the account rather than by the merger parties.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What service is performed by each party for which they receive compensation?

SRS Acquiom created the product design and the intellectual property that made Escrow Shield Plus possible, and performs sales and administrative services. AXA Equitable holds the funds and provides the principal guarantee. AXA Equitable also manages the investment of funds held in the separate account. Guarantees are based on claims paying ability of AXA Equitable.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

What exactly is patented?

SRS Acquiom holds a patent on a method for analyzing the behavior of prior escrows and then applying the resulting data to invest on terms that apply to a pool of current transactions, while meeting the liquidity needs of the underlying funds.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Why should I trust the modeling and data used to create this product?

The model is based on SRS Acquiom’s database of M&A escrow accounts, which is one of the most comprehensive and largest in the industry. Additionally, AXA Equitable insures against any losses on the fund principal. If there is an investment loss or the model is flawed in any way, AXA Equitable is obligated to protect fund investors against any resulting loss of principal. Guarantees are backed by the full balance sheet of AXA Equitable and based on the claims paying ability of AXA Equitable.

See Escrow Shield PlusSM overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Tell me more about your data and modeling M&A escrow payout behavior.

SRS Acquiom has managed hundreds of escrows from inception to final release, and that number is growing at over 100 per year. We have overseen over a thousand claims against escrow, of which most have been finally resolved. These cover close to 100 independent subject matters. We see and resolve 200–300 new claims per year. We record 200 individual data points about the terms of each deal, and have modeled how deal terms affect claim behavior. With this proprietary data, we’ve created what we believe to be one of the most current and comprehensive models of escrow behavior. The model was created by our Director of Data Analytics, who holds a PhD in artificial intelligence.

For more information, please request to see our SRS Acquiom 2015 Claims Study.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Has Escrow Shield Plus™ been registered?

Yes. The product is a Funding Agreement registered under the Securities Act of 1933 and complies with New York insurance Regulation 128 (11 NYCRR 97). A prospectus is on file with the SEC and discloses information about the offering.  See sec.gov.

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

Does FDIC apply to Escrow Shield Plus™?

No. This is not a bank deposit, therefore FDIC insurance does not apply, as FDIC similarly does not apply to money market mutual funds or other securities or investment products. Note that FDIC has limits; if you have more than $250k with a bank that enters bankruptcy you could become a general creditor to the bank and not be assured of receiving a full return of principal.

Escrow Shield Plus offers a guarantee against principal loss from AXA Equitable. Guarantees are based on the claims paying ability of AXA Equitable. (more on principal guarantee)

See Escrow Shield Plus overview and prospectus for more information.

Contact us at sales@srsacquiom.com to learn more.

EscrowUP (18)

What is EscrowUP?

EscrowUP is a program designed to help dealmakers make a positive impact by using M&A escrows to empower emerging entrepreneurs. When merger parties elect to have their escrow participate in the program, they get exactly the same economic and other terms they otherwise would with SunTrust and Acquiom while benefiting the community. This is a trailblazing program that lets those involved in M&A come together and significantly boost a diverse and talented pool of next-generation entrepreneurs. The M&A community creates meaningful impact without detracting from the bottom line. EscrowUP is easy and requires no additional effort from merger parties.

What is the charitable mission of EscrowUP?

Most parties to a merger transaction got a lot of help from others on their journey to the closing of their deal. EscrowUP is a way for them to give back to the next generation of entrepreneurs without any impact to their deal. The charities that benefit represent a broad cross-section of organizations that support those who are working to drive our economy forward. The charities that benefit are described here.

How much money do you expect to raise through the EscrowUP program?

The amount raised depends on the number of participating transactions and the amounts held in escrow accounts associated with these transactions. SRS Acquiom will contribute up to a 24 basis points (annual rate) donation on funds held in escrow.  For perspective, a number you’ll see in our materials is $1 billion in aggregate participating escrows triggering a $3 million contribution to the program in total.  That is derived by taking 20 basis points (the average of 16 bps and 24 bps) as a blended annual rate and applying it to $1 billion in deposits for 18 months.  The more the M&A community comes together around this program, the greater the impact we can have.

What organizations are behind EscrowUP?

SRS Acquiom and Pledge 1% have partnered to create EscrowUP. SRS Acquiom is a global leader at providing escrow services, payments administration, insurance, shareholder representation and other services for merger parties in private M&A transactions. Pledge 1% is a leading nonprofit organization focused on expanding philanthropy in business models across industries. Pledge 1% empowers founders and entrepreneurs around the world to integrate “giving back” into their company’s’ values and cultures. Pledge 1% provides access to a network of like-minded leaders, cutting edge best practices and resources, and mentor support.

Who is Pledge 1%?

Pledge 1% is a global movement to create a new normal in which giving back is integrated into the DNA of companies of all sizes and stages. Launched in December 2014 to accelerate their shared vision around integrating philanthropy into businesses around the world, Pledge 1% is spearheaded by Salesforce, Atlassian, Rally, and Tides.

What is the role of SunTrust Bank?

SunTrust Bank and SRS Acquiom have partnered for years to provide merger parties with best-in-class escrow and payments solutions. SunTrust holds escrow funds according to the terms of the transaction agreement. With EscrowUP, they do so on the same terms and conditions that would apply to any escrow managed by SunTrust and SRS Acquiom. The merger parties get the same superior escrow product and industry-leading service while helping support the next generation of entrepreneurs.

Who makes the charitable deduction and what is the actual flow of funds?

As with our other escrow products, merger parties can select either an interest bearing or non-interest bearing account. Depending on that selection, SRS Acquiom will make a donation at an annual rate of 16 to 24 basis points on the escrow amount.

Is there a tax deduction?

When choosing EscrowUP, merger parties are not waiving interest or making a direct charitable donation. They are selecting either 1) an escrow account earning 8 bps or 2) a non-interest escrow account. SRS Acquiom makes the donation directly, and parties receive recognition for participating in the program and making possible the charitable impact that results.

Which nonprofits receive funds?

Funds are distributed to nonprofit organizations that support entrepreneurship. Recipients include:

  • Springboard Enterprises: Focus on women entrepreneurs. Since 2000, Springboard Enterprises has served as a resource hub of influencers, investors and innovators who are engaged in helping women build big businesses.
  • Endeavor: Focus on emerging market entrepreneurs. Endeavor helps entrepreneurs in emerging markets gain access to mentors, capital, and human resources so they can take their businesses global.
  • Patriot Bootcamp: Focus on veteran entrepreneurs. Patriot Boot Camp (PBC) equips active duty military members, Veterans, and their spouses with the education, resources, and community needed to be successful technology entrepreneurs.
  • Girls Who Code: Focus on future entrepreneurs. Girls Who Code works to educate, inspire, and equip young women with the skills and resources to pursue academic and career opportunities in computing fields.
  • Pledge 1%: Focus on founders/entrepreneurs around the world. Pledge 1% empowers founders and entrepreneurs around the world to integrate “giving back” into their company’s’ values and cultures. Pledge 1% provides access to a network of like-minded leaders, cutting edge best practices and resources, and mentor support.

May a participant specify that funds go to a different nonprofit organization?

This is possible, but not encouraged because the goal of the program is to support entrepreneurship as efficiently as possible. The selected nonprofits have been vetted and approved to support the mission and interests of all participants in the program. Arrangements have been made, and operational systems put in place to transfer funds efficiently at minimal cost. While other arrangements are possible, these would introduce additional steps and possibly costs. Any alternative recipients must be nonprofit organizations with a charitable mission.

Who is participating in EscrowUP?

Many well-known industry opinion leaders and organizations have voiced their support and/or chosen to participate in the program.

SRS Acquiom and partners are seeking endorsement from frequent M&A participants and their advisors—acquiring companies, frequent investors, law firms, and other organizations. Supporters indicate their approval of the campaign and join the call for others to take action as well. While many supporters intend to participate in the EscrowUP on a future transaction, parties to M&A transactions cannot promise to use any particular product or service on a future deal as that must be negotiated between the merger parties per the unique requirements of each transaction.

How are participants acknowledged?

Through visible promotional efforts conducted by SRS Acquiom and Pledge 1% the generosity of participants is acknowledged in the M&A community and beyond. Participants in EscrowUP will receive marketing materials to help them share the positive impact of their choice.

Does SRS Acquiom guarantee positive exposure for program participants?

Unless they elect otherwise, all participants will be acknowledged on the program’s website and in social media.

What are the benefits to participants?

Participating merger parties benefit from the knowledge that their generosity is making a huge difference in the lives of emerging entrepreneurs with limited options.

Because funds flow directly from SRS Acquiom to receiving organizations, there is no cost and little to no burden on participants with respect to accounting, tax filings, registration and similar requirements. Additionally, unless they would prefer not to have their name used, public relations exposure will be given to merger parties in recognition for participating in the program.

SRS Acquiom and partners will be actively promoting the campaign on behalf of participants throughout the M&A industry and in the general business press. Stories of positive impact will be widely shared. SRS Acquiom will also provide promotional tools to help program participants share the impact of EscrowUP with their respective audiences.

As the merger parties get the same economic terms regardless of whether they participate in EscrowUP, these benefits come at no cost to them.

Can I receive these benefits with EscrowShield Plus or other SRS Acquiom escrow services?

We’re anticipating that this program will receive an enthusiastic response from merger participants, and we are working to expand it. As of this date EscrowUP is available with escrow services offered through our partner, SunTrust Bank.

Why has SRS Acquiom decided to create this program?

As with other forward-thinking companies, a closely-held corporate value at SRS Acquiom is giving back to the community at large. EscrowUP is one of several ways we do that. We are very enthusiastic about what EscrowUP can achieve, and we believe that this program will allow us to have an impact beyond what could be achieved via more traditional channels.

As SRS Acquiom’s business grows, so too will the impact of our charitable efforts. In the past, we have supported many national and local charities, including The American Heart Association, KQED Public Media, Senior Support Services, and Coloradogives.org.

What if merger parties wish to donate more to the program?

Merger parties may certainly make a direct contribution to the nonprofit organizations supported by EscrowUP if they wish to do so.

Why has SRS Acquiom decided to support emerging entrepreneurs instead of other deserving groups?

While there are countless deserving organizations that would benefit from receiving support, our decision to support emerging entrepreneurs was to choose a cause that is closely aligned with M&A. All of us have received tremendous support from others throughout our careers, and we see EscrowUP as a great way to help the next generation continue the cycle of growth and entrepreneurship.