Introduction to acquisition finance

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

Information about private equity and the corporate side of an acquisition finance transaction is located in the Corporate module—see the full suite of materials on private equity funds and transactions in Management buyouts—overview.

Information about tax issues in acquisition finance transactions is located in the Tax module—see Tax and management buyouts—overview and Taxation of private equity funds—overview.

Introduction to acquisition finance

What is acquisition finance

The term acquisition finance describes the debt element of the funding for the acquisition of a business. The term is particularly associated with leveraged buy-outs, ie private equity sponsored buy-outs of businesses funded partially with debt finance.

In a typical leveraged buy-out:

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the purchaser, normally a private equity sponsor, acquires a controlling stake in a business
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the acquisition is financed with a mixture of debt and equity (including quasi equity in the form of deeply subordinated debt) contributed by the financial sponsor and management
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the acquisition will typically be structured so that the purchaser

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