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.
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Posted in: Clients: General Information