| Commentary

153 Warranties required by financiers

| Commentary

153 Warranties required by financiers

Those funding the buy-out, in particular providers of equity finance, will also need an adequate level of warranty cover. Although the managers may be asked to give warranties themselves to the providers of equity finance, they are unlikely to have significant financial resources of their own, not least because of the financial commitment that they will presumably have to make to the buy-out. Consequently, the giving of adequate warranties by the sellers may be fundamental in so far as the financiers to the buy-out are concerned, particularly in the case of a substantial leveraged buy-out.

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