Introduction to acquisition finance

What is acquisition finance

The term acquisition finance describes the debt element of the funding for the acquisition of a business. The term is particularly associated with leveraged buy-outs, ie private equity sponsored buy-outs of businesses funded partially with debt finance.

In a typical leveraged buy-out:

•the purchaser, normally a private equity sponsor, acquires a controlling stake in a business •the acquisition is financed with a mixture of debt and equity (including quasi equity in the form of deeply subordinated debt) contributed by the financial sponsor and management•the acquisition will typically be structured so that the purchaser ...