When a risk can't be eliminated before closing, deal lawyers neutralize it another way: they hold back part of the price. That's the escrow — money locked up, released only if the risk doesn't materialize. On AI, that mechanism is already in place.
An 18-to-24-month escrow on AI risk means, for the seller, a portion of the price tied up for two years, conditioned on the absence of enforcement or a compliance failure. It isn't a nominal discount — but it's frozen value, unavailable, at risk. And the vaguer the AI Act exposure, the wider and longer the holdback the buyer demands.
Reed Smith also notes targeted indemnities on training-data rights, open-source and third-party data — exactly the areas the EU AI Act (Article 10, data governance) puts under pressure.
The size and duration of an escrow don't come out of thin air: they reflect the buyer's uncertainty. The more documented and bounded the risk, the smaller the holdback. A D7™ score — AI Act exposure characterized across 7 dimensions, evidence levels PROVEN/INFERRED/ABSENT, clauses ready to insert — turns an "AI grey zone" into a quantified risk. That's what takes an escrow from 20% over 24 months down to a targeted, short holdback.