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,...

Mezzanine facilities in acquisition finance: LMA-based drafting changes, PIK interest and yield protection, intercreditor subordination, and warrants

Published by a LexisNexis Banking & Finance expert

Practice notes

This Practice Note outlines the usual features of a mezzanine facility and identifies the principal amendments required to convert a senior facilities agreement into a mezzanine facility agreement in an acquisition finance context. For a primer on acquisition and leveraged finance, see Practice Note: Introductory guide to acquisition finance, and for definitions of commonly used terms, see: Glossary of acquisition finance terms and jargon. For the role of mezzanine facilities in real estate finance, see Practice Note: Senior loans, mezzanine loans and intercreditor arrangements in real estate finance.

What is mezzanine debt?

The mezzanine facility is a layer of funding that sits behind the senior facilities in priority. It is sometimes deployed in leveraged finance transactions:

to bridge any gap in the purchase price once the senior facilities and equity investment (and any other funding) are taken into account, and
to reach lenders who favour mezzanine, which offers higher risk and potential higher returns, rather than senior debt

Mezzanine funding is typically supplied by institutional investors, including leveraged loan funds, pension schemes, hedge funds and specialist mezzanine houses...

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Web page updated on 21/05/2026

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