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,...

Second lien debt in acquisition finance: development, documentation (Facility D vs standalone), pricing and covenants, security and intercreditor rights, enforcement mechanics, and restructuring (schemes, valuation, coordination)

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Practice notes

What is second lien financing?

Second lien financing describes funding that is principally backed by the same collateral package as senior or first‑ranking borrowings, yet it generally sits behind that senior or first‑ranking debt on a second‑ranking basis, whether in terms of payment priority and/or security (for more detail, see the Intercreditor position section below). It operates as a tranche of borrowing positioned between senior bank facilities and other junior or subordinated indebtedness within a leveraged buy‑out. Second lien borrowings are most often structured as term loans (or issued as notes in the US). The investor base for second lien instruments is typically institutional investors, encompassing funds that allocate to leveraged loans, collateralised loan obligations (CLOs), hedge funds, and other specialist debt funds...

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Ian Chin

Morrison & Foerster

Ian Chin's practice focuses on international financing and restructuring transactions.He advises both borrowers and lenders and is experienced in bank lending (investment grade and leveraged), acquisition finance, structured finance, high yield bonds and derivatives. Prior to joining Cleary Gottlieb in 2015, Ian worked in the Banking department of a major international law firm in London and Abu Dhabi and also spent six months on secondment with the Loans Syndication desk of BNP Paribas in London....

Web page updated on 21/05/2026

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