Acquisition finance meaning

In a private equity-backed management or leveraged buyout, the principal documents fall into three main groups: Acquisition documents — these set the terms of the purchase between the seller and the buyer (ie newco) Equity documents — these set the terms of the equity investment and govern the relationship between the investor/s and management Finance documents — these cover the provision of the debt facilities and any related facilities (for example, a revolving credit facility for working capital) Acquisition documents Heads of terms (acquisition) The heads of terms, kept to a short form, provide a high-level summary of the parties’ expectations, shared understanding and agreement on the key terms of the intended acquisition. They are signed at the outset of the deal once the parties have aligned on the principal points and before the investor incurs costs on due diligence and the negotiation of the transaction documents...

At completion At completion, funds are transferred between the parties and the deal is treated as completed. For a straightforward corporate facility, this typically involves a movement of monies from the lender to the borrower. In other financing structures, such as acquisition or asset finance, monies will ordinarily pass from the lender(s) to the borrower or to an existing lender (where its loan is being refinanced) and then from the borrower, acting as purchaser, to the seller of the business or asset. Following completion, the lender’s solicitors must address several legal and practical tasks. This checklist sets out the principal items for the lender’s lawyers to handle post-completion, including: perfecting security addressing any conditions subsequent complying with solicitors’ undertakings managing the original documents and compiling transaction bundles, and billing the client These matters are pertinent to most transactions and apply equally to bilateral and syndicated facilities. For further detail, see Practice Note: Post-completion phase in loan transactions...

This Checklist is intended for situations where you act for the buyer acquiring a registered freehold or leasehold commercial property, whether with vacant possession or already let under one or more leases. It is not comprehensive and cannot anticipate every scenario in every deal. You should always assess if any further points require attention. It is assumed that: the property is not subject to any residential tenancies; and the seller is solvent This Checklist covers these principal areas: Preliminary matters Is the buyer using finance to acquire the property? Before exchange of contracts Are you ready to exchange? Exchange of contracts Post exchange steps Between exchange and completion Are you ready to complete? Completion Post completion Preliminary matters See also Practice Note: Transferring commercial property—a practical guide — Preliminary matters. Are the buyer’s instructions and intended use for the property clear? Strong due diligence and effective...

In this issue: Sustainable finance and ESG weekly round-up Economic Crime and Corporate Transparency Act 2023 Lending Acquisition finance Shipping finance Real estate finance Sustainable finance Debt capital markets Derivatives Regulation for banking lawyers Sanctions Daily and weekly news alerts New and updated content Useful information Sustainable finance and ESG weekly round-up For a summary of this week’s Sustainable finance and ESG developments, see Sustainable finance and ESG weekly round-up—14 November 2024. Economic Crime and Corporate Transparency Act 2023 Economic Crime and Corporate Transparency Act 2023 (Commencement No 3) Regulations 2024 (SI 2024/1108): Provisions in ECCTA 2023 on civil recovery of cryptoassets in Scotland took effect on 7 November 2024, and measures introducing the UK-wide offence of failure to prevent fraud will commence on 1 September 2025. See: LNB News 07/11/2024 12. Unique Identifiers (Application of Company Law) Regulations 2024 (SI 2024/Draft): These draft Regulations would widen...

In this issue: Budgets and Finance Bills Companies and corporation tax Brexit and tax Real estate tax Individuals and income tax Stamp and transfer taxes VAT Daily and weekly news alerts New and updated content Dates for your diary Trackers New Q&As Useful information Budgets and Finance Bills King’s Speech 2024 His Majesty the King outlined the government’s priorities, agenda and intended measures for the forthcoming parliamentary session during the State Opening of Parliament on 17 July 2024. Initial reactions from the Private Client community to the announcements have been collated. See: LNB News 17/07/2024 92. CIOT letter to the new Exchequer Secretary to the Treasury The CIOT has written to the incoming Exchequer Secretary to the Treasury, James Murray MP, setting out tax matters for the new administration. See: LNB News 17/07/2024 22. Companies and corporation tax Supreme Court finds advisers’ fees were capital in...

In this issue: Companies and corporation tax Stamp taxes VAT Individuals and income tax Taxes management and litigation Employment taxes Budget and Finance Bills Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal decides interest on intra-group loans not restricted under transfer pricing rules but debits disallowed under unallowable purpose rule (BlackRock Holdco 5, LLC v HMRC) BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 considers whether, for UK tax purposes, interest on intra‑group borrowing put in place to help fund a commercial acquisition is deductible. Two principal points were before the Court of Appeal: the transfer pricing analysis and the loan relationships unallowable purpose question. On the transfer pricing limb, the Court of Appeal allowed the taxpayer’s appeal. As a result, deductions for interest on the intra‑group loans were not curtailed by the transfer...

For both the investing private equity fund and the target’s leadership, the prime lure of a private equity-backed buyout is the chance to crystallise a meaningful gain on exit. There are several potential paths to exit from such an investment, most typically: a trade sale to another company operating within the same sector, a flotation (IPO), or a secondary buyout (SBO). The ultimate route will hinge on considerations such as public market appetite for a listing and whether credible purchasers are available. Management often influence the decision, and may favour renewed private equity support via an SBO when the business model and prevailing market backdrop align. A secondary buyout (SBO) is, in essence, a private equity-backed acquisition of a company that has already undergone a private equity-backed buyout. In an SBO, the existing private equity owner exits its stake, though the current management team can remain in post afterwards. Alternatively, fresh management might be appointed, or a blend of old and new...

This Practice Note looks at Term Loan B (TLB) facilities, which often feature as a senior tranche within syndicated loans in leveraged financings. TLBs are long-established in the US market and are increasingly seen in the European lending market for institutional investors. It examines the structure of a typical TLB and how it diverges from traditional European leveraged loans, before setting out the key features. This Practice Note assumes some understanding of leveraged finance. For introductory information, see: Introductory guide to acquisition finance. For explanations of common terms, see Practice Note: Glossary of acquisition finance terms and jargon. What is a Term Loan B? In lending markets, ‘Term Loan B’ or ‘TLB’ (short for Term Loan Bullet) describes a tranche of senior secured credit facilities made available to a borrower and intended to be syndicated in the institutional loan market. They are usually floating-rate term facilities with an actual or implied non-investment grade rating, a five to seven year maturity and either nominal amortisation of 1% per annum...

Banking regulation—Luxembourg—Q&A guide This Practice Note provides a jurisdiction-specific Q&A on banking regulation in Luxembourg, published in the Lexology Getting the Deal Through series by Law Business Research (law stated as at 7 February 2023). Authors: Loyens & Loeff—Adrien Pierre; Vanesa Gomez Pena. 1. What are the principal governmental and regulatory policies that govern the banking sector? Luxembourg is a leading financial centre, so nurturing the financial industry is a core policy aim. The Ministry of Finance partners with Luxembourg for Finance (the agency for the development of the financial centre) to promote, expand and diversify the Luxembourg financial centre, while identifying new opportunities. Digitalisation. Anti-money laundering and countering the financing of terrorism (AML/CFT). Sustainable finance. Financial education. Policies are being adapted as needed to respond to the covid-19 pandemic, to which the sector has shown strong resilience. 2. What are the defining characteristics of a bank to be caught by the banking laws and regulations? Is...

TO BE PRINTED ON THE BORROWER’S SOLICITORS’ HEADED PAPER To: [ insert details of the lender’s solicitors ] (the Lender’s Solicitors) and [ insert details of the lender ] (the Lender) Dear [ insert organisation name ] Completion undertaking This undertaking concerns the acquisition of [ insert property description ] (the Property) by [ insert borrower’s name ] (the Borrower) under a sale contract dated [ insert date ] between [ insert seller’s name ] (the Seller) and the Borrower (the Sale Contract), together with the grant of a first legal charge over the Property in favour of the Lender pursuant to a facility agreement dated [ insert date ] between [ insert details ] (the Facility Agreement). For the purposes of this letter, ‘completion’ means completion of the Transfer of the Property to the Borrower (the Transfer), and does not include registration of the Transfer at HM Land Registry. We are instructed by the Borrower. We enclose: ...

Dated [ insert date ] Introduction This legal due diligence questionnaire concerns the intended acquisition by [ insert buyer name ] ( Newco ) of the whole issued share capital of [ insert name of target company ] Limited (the Target ) from [ insert seller name ] (the Seller ) (the Proposed Acquisition ). The questionnaire exists to enable Newco, Newco’s solicitors and its professional advisers involved in the Proposed Acquisition to obtain the information they require to aid the valuation of the Target and the subsidiaries of the Target (the Group and each a Group Company ). We reserve the right to raise further enquiries in relation to both your replies to this questionnaire and generally...

Legal due diligence questionnaire—private M&A—share purchase Dated [ insert date ] Introduction This legal due diligence questionnaire concerns the intended purchase by [ insert buyer name ] (the Buyer) of the whole of the issued share capital of [ insert name of target company ] Limited, incorporated in England and Wales under number [ insert company number ] (the Company), from [ insert seller name ] (the Seller) (the Proposed Acquisition). This questionnaire is intended to assist the Buyer, the Buyer's solicitors and other professional advisers acting on the Proposed Acquisition to secure the information the Buyer needs to inform its valuation of the Company. Please respond to each question comprehensively. Please set out your responses in italics immediately beneath each question and kindly supply copies of all relevant documentation, ensuring that all responses and documents are plainly identified by reference to the appropriate paragraph of this questionnaire. We reserve the right to raise further enquiries regarding both your responses to this questionnaire and, more generally, matters arising...