Acquisition finance—facilities agreement
Acquisition finance—facilities agreement

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Acquisition finance—facilities agreement
  • Sources of finance for leveraged acquisitions—impact on documentation
  • How does an acquisition finance facility agreement differ from an investment grade facility agreement?
  • LMA Leveraged Facilities Agreement
  • Facilities
  • Utilising, repaying and prepaying the facilities
  • Payment of fees, interest, and other payment obligations
  • Guarantee
  • Representations, undertakings and events of default
  • Changes to the parties
  • more

This Practice Note provides an introductory guide to typical provisions found in a straight forward acquisition finance facilities agreement. It provides an overview of the possible sources of finance for leveraged acquisitions before discussing the main ways in which a typical facilities agreement for leveraged acquisitions differs from a standard investment grade facilities agreement. Each section of a standard senior leveraged finance facilities agreement is then discussed in turn.

For an introductory guide to acquisition finance, see Practice Note: Acquisition finance—introductory guide and for a glossary of commonly used terms and jargon, see the Glossary of acquisition finance terms and jargon.

Sources of finance for leveraged acquisitions—impact on documentation

Senior facilities are one of a number of different possible sources of finance for leveraged acquisitions—this section contains a brief overview of the various possible funding sources.

An acquisition finance transaction will normally be funded using a mixture of debt and equity. The debt may take the form of high yield or senior notes or loans or both. Where the transaction is funded wholly or partially with loans, more than one type of loan facility may be used, each type ranking differently in the capital structure. There are a number of different possible combinations, but as an example, a transaction may be funded using:

  1. senior facilities only, eg in the form of Facility