A guide to Practical Law Finance's acquisition finance resources. Acquisition finance covers a broad range of financing structures where an existing company or special purpose vehicle (SPV) purchases all or part of the assets or shares of a public or private target company. Examples of deals involving acquisition finance include leveraged buyouts (LBOs), institutional buyouts (IBOs), management buyouts (MBOs), management buy-ins (MBIs) and corporate acquisitions (that is, debt financed acquisitions made by trade buyers rather than management or a private equity firm).
This note acts as a guide to Practical Law Finance's resources on acquisition finance. Acquisition finance covers a broad range of financing structures where an existing company or special purpose vehicle (www.practicallaw.com/4-107-7534) purchases all or part of the assets or shares of a public or private target company. Examples of deals involving acquisition finance include leveraged buyouts (www.practicallaw.com/4-200-1393) and corporate acquisitions (that is, debt financed acquisitions made by trade buyers rather than management or a private equity firm).
For an overview of the debt finance aspects of a buyout, covering the different types of debt, security, priority issues and the typical terms of the senior debt (www.practicallaw.com/2-107-7238) and mezzanine finance (www.practicallaw.com/8-107-6844) documentation, see Practice note, Acquisition finance: debt for buyouts (www.practicallaw.com/3-107-4036).
For a note which considers the commercial factors that influence the buyer's choice of finance on an acquisition of a business and analyses the most common forms of debt and equity finance, see Practice note, Acquisition finance: funding sources for acquisitions (www.practicallaw.com/7-107-3756).
For a guide to our lending resources, see Practice note, A guide to Practical Law Finance's lending resources (www.practicallaw.com/7-500-3009).
For a guide to our debt capital markets resources, see Practice note, A guide to Practical Law Finance's debt capital markets resources (www.practicallaw.com/7-422-3994).
For an overview of senior debt in a buyout, see Practice note, Acquisition finance: debt for buyouts: Senior debt (www.practicallaw.com/3-107-4036).
For a note which explains what second lien financing (www.practicallaw.com/9-350-9996) is, how it developed and how it can be distinguished from senior debt and other forms of subordinated debt, see Practice note, Second lien financing: overview (www.practicallaw.com/8-353-7952).
For an overview of mezzanine debt, see Practice note, Acquisition finance: debt for buyouts: Mezzanine debt (www.practicallaw.com/3-107-4036).
For a note on raising debt finance by issuing high yield bonds, including an explanation of key structuring issues and typical high yield bond covenants, see Practice note, High yield bonds (www.practicallaw.com/2-502-9988).
For an overview of PIK debt (www.practicallaw.com/1-375-9197), see Practice note, Acquisition finance: debt for buyouts: PIK debt (www.practicallaw.com/3-107-4036).
For a note which outlines the key characteristics of equity bridge facilities provided to private equity funds, see Practice note, Equity bridge facilities to private equity funds (www.practicallaw.com/3-505-8094).
For an overview of raising equity finance, see Practice note, Acquisition finance: funding sources for acquisitions: Methods of raising equity finance (www.practicallaw.com/7-107-3756).
For information on the use of equity finance in a buyout, see Practice note, Private equity buyouts: overview: Equity finance (www.practicallaw.com/6-518-0998).
For a note which explains structural and contractual subordination (www.practicallaw.com/3-107-7332) in the context of acquisitions, see Practice note, Consideration and acquisition finance: international acquisitions: Ranking debt (www.practicallaw.com/4-107-3932).
For an overview of subordination arrangements generally, see Practice note, Subordination (www.practicallaw.com/7-242-0147).
For an overview of intercreditor arrangements in the context of acquisition finance, see Practice note, Acquisition finance: debt for buyouts: Intercreditor/subordination deed (www.practicallaw.com/3-107-4036).
For an overview of the typical security structure and security documentation in a buyout, see Practice note, Acquisition finance: debt for buyouts: Security documentation (www.practicallaw.com/3-107-4036).
For a guide to our resources on security, see Practice note, A guide to Practical Law Finance's security and quasi security resources (www.practicallaw.com/1-386-3269).
For a note which provides an overview of issues for lenders financing an acquisition which must comply with the City Code on Takeovers and Mergers (www.practicallaw.com/8-107-5905), see Practice note, Financing an offer for a public company: issues for lenders (www.practicallaw.com/0-380-0625).
For a note which provides an overview of the "certain funds" requirement set out in the City Code on Takeovers and Mergers, see Practice note, Financing an offer for a public company: the certain funds requirement (www.practicallaw.com/5-370-3957).
For a note which considers the rules under the Companies Act 2006 that prohibit a public company from giving financial assistance (www.practicallaw.com/6-107-5751), see Practice note, Financial assistance (www.practicallaw.com/8-382-5504).
For a brief summary of how the financial assistance rules apply to buyouts, see Practice note, Financial assistance in buyouts (www.practicallaw.com/3-107-4041).
For a note which considers the commercial and tax issues raised by the use of an earn-out (www.practicallaw.com/9-107-6184) structure on the sale of a company where at least part of the price paid by the buyer is calculated by reference to the performance of the target company over a period of time after the acquisition takes place, see Practice note, Earn-outs (www.practicallaw.com/9-107-3755).
Debt buy-backs can occur in an acquisition finance context. As a result of the financial crisis following the collapse of Lehman Brothers in 2008, for example, certain private equity providers started buying back debt in companies they owned. For a guide to our distressed debt trading and debt buy-back resources, see Practice note, A guide to Practical Law Finance's lending resources: Distressed debt trading and debt buy-backs (www.practicallaw.com/7-500-3009).
For a guide to our tax resources on lending, see Practice note, A guide to Practical Law Finance's lending resources: Tax (www.practicallaw.com/7-500-3009).
For a note on the tax issues for the buyer to consider when financing an assets acquisition, see Practice note, Asset purchases: tax aspects of financing the acquisition (www.practicallaw.com/9-367-0974).
For a note on the tax issues relating to earn-outs, see Practice note, Earn-outs: Taxation of the Earn-out.
For a note which lists the major tax issues which arise when structuring the sale of a company's share capital (the note assumes that the target company is resident and incorporated in the UK and deals mainly with the position of UK resident shareholders), see Practice note, Share purchases: tax overview (www.practicallaw.com/2-372-4999).
For a note which outlines how share issues can be structured and considers the main tax issues by reference to each of the relevant taxes: corporation tax, capital gains tax, income tax, value added tax, stamp duty and stamp duty reserve tax, see Practice note, Share issues: tax (www.practicallaw.com/4-107-3729).
For a note which provides an overview of the main tax issues that arise in private equity transactions (including the taxation of private equity funds and executives), see Practice note, Private equity: tax overview (www.practicallaw.com/5-378-7462).
For a discussion of some of the main tax issues in relation to a secondary issue of shares or loan stock (www.practicallaw.com/0-107-6782), see Practice note, Rights issues and secondary issues: tax overview (www.practicallaw.com/3-107-3555).
For a guide to our resources on legal opinions for loan transactions, see Practice note, A guide to Practical Law Finance's lending resources: Legal opinions in loan transactions (www.practicallaw.com/7-500-3009).
For a guide to our resources on executing finance documents, see Practice note, A guide to Practical Law Finance's lending resources: Execution of loan documents (www.practicallaw.com/7-500-3009).
For a guide to our lending standard documents, clauses and drafting notes, see Practice note, A guide to Practical Law2-1073933 (www.practicallaw.com/7-500-3009)
For an overview of the main issues to consider when structuring consideration and finance (debt and/or equity or a combination of the two) for a cross-border acquisition, see Practice note, Consideration and acquisition finance: international acquisitions (www.practicallaw.com/4-107-3932).
For a practical analysis of the mechanics of signing and closing and key provisions of opinion letters in cross-border acquisitions, see Practice note, Signing, closing and opinions: international acquisitions (www.practicallaw.com/2-107-3933). Although the note focuses on cross-border acquisitions many of the topics covered are relevant to the financing aspects of this type of transaction.
Links to our resources on acquisition finance:
Links to Practical Law services covering key practice areas relevant to acquisition finance:
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