Why it matters at exit
An escrow commonly ties up something like 10% to 20% of the headline price for roughly one to two years, so the figure a buyer announces is not the cash that reaches your bank on the day you sign. The buyer uses it as protection: if a warranty you gave turns out to be untrue, or a disputed tax bill or customer claim surfaces after completion, they recover the money from the retained amount instead of pursuing you separately. The cleaner your business looks during due diligence, with audited numbers, documented contracts and no unresolved disputes, the stronger your case for a smaller holdback, a shorter period, or none at all. Putting your financial and legal housekeeping in order years before a sale is what earns you that negotiating room.