The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
The equity documents on an acquisition finance transaction will normally be negotiated between the sponsor and the management team, with the lawyers for the lenders having the right to review and comment on the drafts.
There are some specific points in the equity documents that the lenders and their lawyers will check in order to ensure that the lenders' interests are protected. For this reason the lenders' satisfaction with the form and substance of the equity documents will typically be a condition precedent to funding the transaction.
The main equity documents in an acquisition finance transaction are:
the articles of association of the top company in the group structure (topco)
the shareholders' agreement, also known as the investment agreement or subscription agreement
service contracts and bonus scheme documents
loan note instrument and loan notes, and
downstream loan agreement(s)
This note makes some points of general applicability before looking at each document individually. See Practice Note: Acquisition finance—key documents and parties for information on the contents of the main equity documents and the roles of the main participants in an acquisition finance transaction.
For an introductory guide to acquisition finance, see Practice Note: Acquisition finance—introductory guide and for an explanation of commonly used terms and jargon, see: Glossary of acquisition finance terms and jargon.
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