Pricing, tax & closing
Escrow & Closing, Step by Step
What actually happens between a signed agreement and shares (or funds) actually moving.
Once a secondary deal has cleared ROFR and company consent, closing itself follows a fairly standard sequence built around a neutral third-party escrow agent — nobody wants to be the side that wires funds or transfers shares first with no guarantee the other side follows through.
The escrow step exists specifically to solve that trust problem: funds and signed transfer documents both sit with a neutral party until every condition to closing is satisfied, then everything releases simultaneously.
How it works
- Buyer and seller (and often the company) sign the final stock or assignment purchase agreement.
- The buyer wires funds to the escrow agent — not directly to the seller.
- The company countersigns any required transfer paperwork and confirms it will update its cap table upon closing.
- Once every condition is met, the escrow agent releases funds to the seller and confirms the transfer is recorded — closing is complete.
Worked example
A $75,000 secondary purchase closes through a third-party escrow agent that charges a flat $850 fee, split evenly between buyer and seller.
- Day 0
- Final purchase agreement signed
- Day 2
- Buyer wires $75,000 to escrow
- Day 5
- Company countersigns transfer paperwork
- Day 7
- Escrow releases $75,000 to seller; cap table updated
- Escrow fee (split)
- $425 buyer / $425 seller
Why it matters: The gap between a "signed deal" and money actually changing hands is usually about a week once ROFR and consent are cleared — and it runs through a neutral party specifically so neither side has to trust the other with a same-day, direct wire.
Watch out for
- Confirm who's paying the escrow fee (and how it's split) before signing — it's a small dollar amount but an easy point to overlook until the closing statement arrives.
- A closing that stalls at the "company countersigns" step is common — the company controls the pace of its own cap table update and isn't always fast about it.
- Verify you're using a legitimate, licensed escrow agent, not simply wiring funds to an individual — this is a real fraud vector in private-market transactions.