Practical Law UK Glossary 0-107-7159 (Approx. 4 pages)
Glossary
Retention
In the context of an acquisition, the retention of part of the purchase price, either:
As security for the buyer in respect of potential breaches of warranty or indemnity. The retention arrangement is usually for a fixed period, which may mirror the warranty limitation period.
To secure the parties' payment (or repayment) obligations under a price adjustment mechanism.
Where a retention is agreed, the retained amount is often paid into an escrow account on completion of the transaction.