From Earnest Money to Flow of Funds: How Escrow De‑Risks Your Deal
Deals Built on Trust, Timing, and Clarity
Mergers and acquisitions live and die on trust, timing, and paperwork that actually does what it promises.
This conversation with Arizona Title and Escrow Corporation’s Monica May Dunn cuts to the core of de-risking a deal: bring escrow in early, make earnest money meaningful, and map a funds flow everyone can read at a glance.
We start with where most first-time buyers and sellers get lost—the Letter of Intent (LOI). It shapes expectations and sets the stage for deposits, diligence, and deadlines.
An earnest deposit isn’t window dressing. It’s a signal that the buyer is serious enough to put money at risk while the seller opens the books. When escrow holds that deposit, both sides get a neutral referee who acts only by the written terms.
Neutrality matters most when deals wobble. Vague LOIs invite disputes. Clear refundability windows, milestones, and triggers prevent expensive stalemates that burn time, legal fees, and goodwill. The lesson: precision upfront is cheaper than litigation later.
What Escrow Really Does
Between signature and closing, escrow handles the unglamorous but essential work that keeps deals from falling apart.
• UCC searches to surface liens and judgments before they become a buyer’s headache.
• Entity document verification to confirm who can legally sign on behalf of an LLC or corporation.
• Lender coordination to meet SBA requirements and keep loan documentation on schedule.
The payoff conversation is key. Buyers often assume “free and clear” happens automatically. It doesn’t. Escrow uses the purchase price to pay off seller debts at closing so the buyer takes clean title.
The funds flow statement becomes the master map—showing every dollar in and out, payoffs, prorations, fees, and the seller’s net. For many, this single document turns closing day from anxiety into confidence.
Why ‘Small’ Deals Aren’t Simple
The myth that small deals are easier collapses under pressure.
Main Street transactions often involve first-time sellers, emotional exits, and messy records. Larger deals multiply attorneys, CPAs, private equity players, and lenders. Both get delayed when communication breaks down.
• Lenders and landlords are common bottlenecks.
• SBA loans require early and complete borrower documentation.
• Lease assignments can stall deals—especially with corporate landlords or municipalities.
The practical fix: surface the lease at LOI, open landlord dialogue early, and assign someone to manage the lender’s checklist. Escrow’s smooth closing checklist helps everyone stay ahead of the eleventh hour.
Managing Risk After Closing
Holdbacks and earnouts shift focus to post-closing risk. A clear purchase agreement defines the conditions for release—tax clearance, final consents, indemnities. Escrow administers these exactly as written, without bias.
Seller financing adds another layer. Balloon payments, step rates, and re-amortizations need discipline. A third-party loan servicing desk handles billing, collections, and reports, keeping relationships intact and compliance clean.
It’s mundane work, and that’s why it works. Predictable systems keep people paying on time.
Governance That Survives Pressure
Behind the paperwork is a human story. Monica’s own acquisition of Arizona Escrow shows how governance protects when life happens.
After the founder’s death, COVID uncertainty, and years of negotiations, clear buy-sell terms and steady communication carried the deal through. Her line—“my vision was bigger than my fear”—captures what good owners bring to the table: patience, clarity, and courage.
The takeaway for owners: have strong operating agreements and authority resolutions in place before you need them. For buyers: treat diligence as protection, not obstruction. It’s the bridge to a clean close.
Final Safeguards and Everyday Lessons
The episode closes with real-world quirks—a missing prize bull stalling a ranch sale—and reminders that details matter.
Remote notarization, mobile notary options, and written follow-ups for every call keep deals documented and defensible.
Because in the end, every successful transaction comes down to this: clear agreements, clean communication, and a paper trail strong enough to hold when pressure hits.
