A competitor contacted me, and after discussions I agreed to sell a software business for $3m. We signed a non-binding LOI, with them holding 10% of the price for the next 3 months, to make sure I help with transition.
Buyer insists on getting the full source code to review as part of Due Diligence, instead of doing screensharing sessions (as many as they want), having me walk them through. What is best practice?
Buyer proposed to use their local law firm to handle the transfer, to save on Escrow & transfer fees, which they would cover. They are ok with Escrow too, if we split fees. My concern is: even using Escrow.com, after Due Diligence, Buyer will get access to full source code. Quote from Escrow:
The seller is not paid until the buyer accepts the merchandise and has the chance to fully inspect it. After the buyer inspects and accepts the merchandise, the funds will be moved from our escrow account to the seller's account.
So they can end up with a full code copy and decline the acceptance, as it's not a physical product which could be returned. So, using Escrow.com would be useless?
I would have expected Escrow to get ownership of all code, domains etc, inspect it (have a checklist from Buyer), and then transfers both funds & assets at the same time, or return both without Buyer getting code access. How should I proceed?