Escrow Turns a Corner

Escrow solutions are an intrinsic cog during mergers and acquisitions (M&A) transactions, Special Purpose Acquisition Company (SPAC) IPOs, Limited Partner (LP) collections and distributions, milestone-based transactions, and litigation settlements.

As market conditions across Europe trend towards stability, client demand for escrow services is once again picking up, as Dewi Habraken explains.

M&A in Europe is getting back to health

The slowdown in European M&A has not been great for escrow, but green shoots are beginning to emerge.

Although European M&A is not at the levels where it used to be, there are grounds for optimism. In 2024, deal value for European M&A hit $483bn, a 16% year-on-year increase, with a lot of this activity being concentrated in the UK and France¹.

European M&A has also been fairly resilient this year, despite all of the prevailing uncertainty, e.g. US trade tariffs, ongoing regional conflicts etc. According to S&P, the total number of deals fell by 5% in Q1 2025 (versus Q1 2024), but transaction values were up 3.6%².

Elsewhere, SPAC IPOs, which were fairly ubiquitous during the COVID-19 era but have since become less so, are having a slight renaissance in the US. In January 2025, there were eight SPAC IPOs in the US, securing proceeds of $1.13 billion, versus in January 2024, when there was just one SPAC IPO, accumulating $58 million³.

Some are hoping that SPACs will return to Europe as well.

Although de-SPAC deals – whereby a SPAC merges with its target company – do not have much impact on the escrow business, there is an indirect correlation between de-SPACs and the wider M&A market. This is because de-SPAC-ed companies are often cash rich due to their PIPE (private investment in public equity) funding at closing, which can sometimes result in them making bolt-on acquisitions as they look to achieve scale.

De-SPACs can also bring valuation visibility to certain sectors, creating exit opportunities and liquidity events that recycle capital back into the private markets, and even leading to carve-outs or take-private opportunities when performance lags. All of this ultimately drives up M&A.

As M&A and SPAC activity gradually normalises, we anticipate that the demand for escrow services will follow.

Private markets find their footing again

Private markets in Europe are facing some tough times, but they should not be written off.

In the case of private equity, high interest rates have forced up borrowing costs and inflation is eating into portfolio company margins. Compounding matters further is that the industry is also dealing with an increasingly difficult liquidity situation, with distributions as a proportion of net asset value falling to their lowest rate in more than a decade⁴.

As a result, fundraising has taken a knock, declining by 23% from $523bn in 2023 to $401 bn in 2024. However, Bain & Co notes that despite these challenges, interest rates are either stable or falling in some markets, dry power is fairly abundant and demand from sovereign wealth funds and private wealth in the asset class is healthy⁵.

Other private market strategies are doing pretty well. After a challenging fundraising period in 2024, private credit appears to be making a comeback. In Q1 2025, private debt globally attracted $74.1 billion, versus $46.7 billion in Q1 2024⁶. Although fundraising activity in Europe is slightly lagging behind some of the major markets, a lot of investors still see the strategy as a defensive asset class against volatility and a useful inflationary hedge.

Infrastructure is also riding high. In Europe, political support for infrastructure projects remains strong, and is only getting more so, as the region doubles down on defence, digitalisation such as AI, data centres, and sustainability/green transition.

Private markets may be going through a difficult period, but asset classes such as private equity are well-positioned to weather the volatility. At the same time, private debt and infrastructure investing are picking up the pace. This is only going to fuel the need for escrow solutions to facilitate LP commitments and distributions across Europe.

While M&A and private markets may have their occasional ups and downs, this does not really happen with litigation and arbitration proceedings. With litigation and arbitration, escrow is always in high demand.

Choosing a provider with a difference

Escrow is a critical service, so choosing the right provider is key, as not all escrow services are created equally.

As well as helping companies mitigate financial risk, particularly when a transaction may involve parties in different jurisdictions, JTC’s escrow solutions provide an enhanced level of speed, accuracy and security when handling assets.

As a non-bank, JTC is incredibly agile and fast, particularly when onboarding and setting up accounts for clients, which is essential for organisations, especially those working in time-pressured environments such as M&A.

JTC’s teams, who are subject matter experts, offer a very hands-on, customised service.

In 2024, JTC launched its enhanced Escrow Services in Europe, having been granted a new licence under the European Payment Services Directive 2 (PSD2). The licence, which was issued by the Dutch Central Bank, enables JTC to provide a comprehensive Escrow service that can be passported across the EU to support both investment funds and private and public companies.

Working in conjunction with a network of major banks, the licence enables JTC to act as an independent and neutral escrow and settlement/paying agent in major transactions, holding funds and assets safely on behalf of parties on both sides of a transaction.

To find out more about the clients JTC has helped in the past, as well as the new solutions JTC can now provide to enhance your strategy, please contact Dewi or visit our dedicated escrow page.

References: 

[1] Boston Consulting Group – January 15, 2025 – M&A outlook 2025: Expectations are high

[2] S&P – May 14, 2025 – Europe M&A by the numbers: Q1 2025

[3] White & Case – March 27, 2025 – Firm foundations; Can US IPO markets continue to build on solid gains?

[4] Bain & Co – Global Private Equity Report 2025

[5] Bain & Co – Global Private Equity Report 2025

[6] Private Debt Investor – Fundraising Report Q1 2025