Term sheets in acquisition finance
Term sheets in acquisition finance

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

  • Term sheets in acquisition finance
  • When are term sheets used?
  • Contents of a term sheet in acquisition finance transactions
  • Description of the facilities
  • Certain funds
  • Guarantee and security
  • Intercreditor arrangements
  • Prepayment and cancellation
  • Representations and warranties
  • Information undertakings
  • More...

Term sheets in acquisition finance

Term sheets in acquisition finance transactions are generally extensively negotiated, and include a lot of the detail which will eventually be included in the full finance documentation. In this respect they differ from term sheets for more general purpose loans, which tend to be less detailed (for more information on term sheets generally, see Practice Note: Term sheets in lending transactions). When shown to a buyer attached to a signed mandate letter, acquisition finance term sheets are seen as an indicator of a buyer’s ability to proceed with the acquisition.

Term sheets themselves are not generally 'fundable'. Further documentation is required before funds can be drawn. This may be full documentation or an Interim loan agreement.

The Loan Market Association has a precedent leveraged term sheet which is available to members on its website.

Acquisition finance term sheets include key commercial terms in detail along with the usual general and Boilerplate provisions for standard loan documents. This Practice Note sets out when term sheets are used in acquisition transactions, the main issues dealt with in acquisition finance term sheets and discusses the best practice guide to term sheet completeness published by the Loan Market Association and European Leveraged Finance Association in November 2020.

For more detailed information on some of the provisions described in this Practice Note, see Practice Note: Acquisition finance—facilities agreement.

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