Financing the acquisition

This Overview is a guide to the Banking & Finance content within the Financing the acquisition subtopic, with links to the appropriate materials.

Sources of finance

The two main sources of funding for an acquisition finance transaction are equity (or quasi-equity such as loan notes) and debt. The equity/quasi—equity portion will normally be provided by the private equity house sponsoring the transaction and the group's senior management. Debt will be provided by banks and other institutions that invest in debt. The materials in this subtopic focus on debt funding.

For an overview of debt and equity funding, see Practice Note: Sources of finance for leveraged buy-outs.

For information on loan notes, see Practice Note: Loan notes—fundamentals.

Senior facilities

Senior facilities may be provided by banks or institutional investors. Senior facilities may comprise:

•
term facilities used to fund the acquisition; senior term debt may be provided under one or more term facilities, each of which has different typical characteristics
•
a working capital facility in the form of a revolving credit facility—depending on the structure of the transaction, this may rank as super senior

Other

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