M&A Funds in Escrow: A Lesson from NSI-MI HOLDINGS, LLC v. Ametek, Inc.


Explore the intricacies of M&A escrow with insights from the NSI-MI HOLDINGS case, a $230 million acquisition involving a 15-month escrow period. Learn key takeaways and court rulings on indemnification obligations, providing valuable lessons for crafting effective escrow agreements in M&A transactions.

M&A Stories

January 4, 2024


In the intricate world of M&A transactions, the duration for holding funds in escrow plays a crucial role in mitigating post-closing challenges. A noteworthy example from the spring of 2021 involves the $230 million acquisition of an Atlanta-based company specializing in radio frequency and microwave test solutions.

Escrow Details:

A substantial $23 million of the purchase price was earmarked for a fifteen-month escrow, securing the seller’s indemnification obligations. One trigger for potential indemnification identified in the purchase agreement was a contractual hiccup with a defense contractor regarding the construction of an echo-free chamber for electronic equipment testing.

Escrow Dispute:

Within the stipulated 15-month period, a buyer’s indemnity claim emerged due to the target’s failure to meet contract specifications. Despite objections from the seller, the dispute found its way to the Delaware Superior Court.

Court Ruling:

The court, ultimately, ordered the release of the escrow, emphasizing that no damages claim had been made by the customer against the company. However, it reiterated the seller’s ongoing indemnification obligation, which extends until the sixth anniversary of the closing, irrespective of escrowed funds.

Key Takeaways:

The NSI-MI HOLDINGS case underscores the importance of aligning the escrow period with the resolution of specific matters. In hindsight, extending the escrow until the customer dispute was settled could have preemptively addressed the buyer’s predicament.


For stakeholders in M&A, this case serves as a valuable lesson in crafting escrow agreements that not only safeguard interests but also anticipate and address potential post-closing challenges.

Case Reference: NSI-MI HOLDINGS, LLC v. Ametek, Inc., C.A. No. N22C-08-489 PRW CCLD, Superior Court of Delaware, (Submitted: August 14, 2023. Decided: November 13, 2023).

By John McCauley: I write about recent legal problems of buyers and sellers of small businesses.

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