LBO 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...

Mergers Notifications received for: NewPrinces/Carrefour Italia (M.12121) under the normal procedure; and Tata Motors/Iveco Group (M.12138), Hartree/ED&F Man Chile (M.12149), Amphenol/Commscope (Connectivity and Cable Solutions) (M.12173) plus KKR/Cinven/CVC/Nemean Midco (M.12191) under the simplified procedure. Clearances covered: Ferrero Group’s acquisition of sole control of CPK SAS (M.12086); a joint venture by EVH Grüne Energie – Beteiligung GmbH & Co. KG and HSBC Alternative Investments S.C.A. SICAV-RAIF (M.12128); joint control of Heroiks SAS by LBO France Gestion SAS and EMZ Partners SAS (M.12167); and joint control of Vinventions Holding S.à r.l. by L-GAM II SCSp and Hayfin Capital Management LLP (M.12171), each following a phase I investigation—see Midday Express. State aid The Commission approved, under EU State aid rules, a French scheme reimbursing the T2 surcharge owed by rail freight operators for certain statutory employees—see the press release. An application has been lodged with the General Court in Case T-478/25, Wizz Air Hungary and Wizz Air Malta v Commission, challenging Decision...

Mergers The Commission has authorised: American Axle & Manufacturing Holdings, Inc to obtain sole control of Dowlais Group plc (M.11981) following a phase I inquiry—see further, Midday Express Centrica plc and Bridgepoint Group to take joint control of National Grid Grain LNG and Thamesport Interchange Limited (M.12155) after a phase I review—see further, Midday Express The Commission has also received notifications in: LBO France Gestion/EMZ Partners/Heroiks (M.12167) (simplified merger procedure) Temasek/Brookfield/Luminace (M.12179) (simplified merger procedure) NOTE—For all live merger investigations before the Commission, see further, EU mergers—ongoing cases tracker State aid The Commission has approved, under EU State aid rules, an Italian measure (valued at €24.5m) to enlarge a multimodal freight terminal near Bologna—see further, Midday Express NOTE—For all live State aid decisions and live formal State aid investigations, see further, EU State aid...

This glossary sets out many of the expressions commonly used in the leveraged finance market. Words appearing in the definitions in bold are defined elsewhere in this glossary. For further banking terminology, please refer to the main Banking & Finance Glossary... Acquisition finance glossary—A Acceleration Acceleration is the formal action taken by the agent, on the instructions of the majority lenders, following an event of default, such as making a demand for early repayment of the loan. See Practice Note: Accelerating a loan for more information... Accordion feature/accordion facility An accordion, also called an incremental debt feature, is a mechanism in the facilities agreement that, provided specified conditions are satisfied (for example, pro forma compliance with a leverage test), permits those lenders under the facilities agreement who wish to do so to advance additional debt. The terms for that extra debt are typically captured in an increase notice. This accordion or incremental debt flexibility is different from structural adjustment, which usually requires the majority consent...

This Practice Note outlines key aspects of a documentary 'relaxation' or 'release' clause, commonly included in leveraged buy-out (LBO) facility agreements. It also considers: the most frequently encountered trigger conditions common ways of easing requirements within the facility agreement, and particular points to address when negotiating this clause This Practice Note assumes a degree of familiarity with leveraged finance structures and documentation. For introductory material, see Practice Notes: Introductory guide to acquisition finance and Introductory guide to leveraged finance facilities agreements. The Glossary of acquisition finance terms and jargon may also be useful. Background Traditionally, LBO facility agreements have placed strict limits on group activities and imposed rigorous mandatory prepayment obligations, reflecting high leverage. Private equity sponsors often contend that, while controls are appropriate when the balance sheet carries significant leverage, once the group has materially deleveraged, such tight constraints become unnecessary. Deleveraging can occur through: a combination of earnings before interest, taxes, depreciation and amortisation (EBITDA)...

This glossary sets out numerous expressions regularly encountered in the restructuring & insolvency sphere. Words shown in bold within definitions are themselves explained in other entries in this glossary as well. A Article X The MLIJ contains a single provision named Article X, aimed at jurisdictions that have already implemented the MLCBI, like England, or are weighing its adoption. Article X states: ‘Not withstanding any prior interpretation to the contrary, the relief available under [insert a cross-reference to the legislation of this State enacting Article 21 of the UNCITRAL Model Law on Cross-Border Insolvency] includes recognition and enforcement of a judgment’ (see Practice Note: UNCITRAL model law on recognition and enforcement of insolvency-related judgments (MLIJ): Article X). Asset-backed security (ABS) A form of security anchored by asset pools, for example loans, leases, and credit card receivables. Assimilated law From 1 January 2024, ‘retained law’ has been retitled ‘assimilated law’. The body of domestic law originally arising from EU obligations, created by the European...