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.
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Posted in: Services: Escrow Shield Plus