Jurisdiction(s):
United Kingdom

Key definition

Acquisition finance definition

What does Acquisition finance mean? acquisition finance is the debt and/or equity raised to fund the purchase price and costs of an acquisition. It is a market term, not defined in legislation or case law, and is used across corporate, banking and leveraged finance practice. Funding may include bank term and revolving facilities, private credit/direct lending, bridge-to-bond loans, high‑yield bonds, mezzanine, vendor loan notes, and equity (for example, a share issue or private subscription). In leveraged buyouts it is commonly secured on the buyer/target group with upstream and cross‑stream guarantees, subject to corporate benefit, distributions rules and financial assistance restrictions. Across England & Wales,...

Ancillary facilities via RCFs under LMA SFAs in acquisition finance: structure, terms, repayment, pro rata sharing, documentation, and links to hedging and third-party banking facilities

Published by a LexisNexis Banking & Finance expert

Practice notes

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acquisition finance transactions

In an acquisition finance transaction, beyond the debt—whether constituted by loans or bonds—needed to finance the deal, the borrower group will commonly require additional banking facilities. These might include, for example, an overdraft, a stand-by letter of credit facility or a foreign exchange facility, and can frequently all be delivered under the umbrella of a revolving credit facility (RCF) in the senior facilities agreement (SFA).

The RCF will usually be capable of being drawn in three distinct ways:

in cash (by way of revolving loans)
as syndicated, non-cash facilities, eg letters of credit—these will be identified in the documentation; and
in the form of bilateral lines known as ancillary facilities

Unlike a revolving credit facility drawn in cash, ancillary facilities are not typically of a kind that lends itself to division amongst several lenders, so the documentation caters for their provision on a bilateral basis. For more on the revolving credit facility, in particular how revolving loans operate, see Practice Note: Senior facilities...

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Web page updated on 21/05/2026

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