Conditions precedent on acquisition finance transactions—general considerations
Conditions precedent on acquisition finance transactions—general considerations

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

  • Conditions precedent on acquisition finance transactions—general considerations
  • Purpose of conditions precedent
  • Key types of conditions precedent
  • Satisfying conditions precedent

The process of satisfying conditions precedent on a acquisition finance transaction is much the same as on other types of lending transaction. An acquisition finance transaction will, however, often have a significantly larger number of conditions precedent than an investment grade transaction, reflecting the greater risk profile and more complicated nature of the transaction. This note provides an overview of the following in the context of acquisition finance transactions:

  1. the purpose of conditions precedent

  2. key types of conditions precedent, and

  3. satisfying conditions precedent

For more detailed information on conditions precedent in acquisition finance transactions, see: Conditions precedent ('CPs'): Tom Speechley: Acquisition finance.

For more general information about satisfying conditions precedent, see Practice Note: Conditions precedent.

Purpose of conditions precedent

Conditions precedent are included in the facilities agreement(s) for the benefit of the lenders. The lenders will make their decision to lend the finance on the basis of a number of legal and commercial assumptions and provisos. Some of these will be specifically set out in the credit papers they will prepare as part of the process of deciding whether to lend. Including a list of conditions precedent in the facilities agreement ensures that the lenders are not obliged to make any loans until they have satisfactory evidence that the assumptions they have made are correct and the provisos met.

If