Acquisition Financing in M&A Transactions: Reconciling Deal Terms With Loan Terms and Closing Conditions

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, March 1, 2018

Recorded event now available

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Program Materials

This CLE webinar will discuss the challenges of closing an M&A transaction on terms consistent with the requirements of an acquisition lender. The panel will explain how each aspect of the acquisition and the financing impacts the other, and the role of both the buyer and the target company in successfully closing a financed acquisition.

Description

An M&A transaction often hinges on satisfying the demands of a lender financing all or part of the purchase price. The buyer and seller must avoid a scenario where the conditions precedent to the buyer’s obligation to close the acquisition have been met but the conditions to the lenders funding the loan have not. The loan commitment must clearly state the financing conditions and provide that there are no other conditions to closing.

Lenders regularly require inclusion of certain provisions in acquisition agreements. The structure of the acquisition dictates factors for financing, including collateral perfection, identity of the guarantors and borrowers, and timing of the acquisition. In deals with complex lending structures, the parties may choose to use a specified form of intercreditor agreement.

M&A lenders will require the representations with respect to the seller be accurate at closing. Lenders will also consider the indemnities provided by the seller in the acquisition agreement. Acquisition agreements typically contain anti-assignment and transfer provisions—the lender may want those provisions to expressly permit the lender to take a lien on the acquisition agreement.

Listen as our authoritative panel discusses how M&A financing terms can impact acquisition terms and how M&A deal structures can affect financing terms. The panel will also discuss loan commitments and how to ensure that loan closing conditions are consistent with the acquisition closing.

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Outline

  1. Role of acquisition lender in M&A transactions
  2. Loan commitments
  3. Structure of transaction: impact on financing terms
  4. Reps and warranties: MAC clauses
  5. Interaction of acquisition loan with other loans: intercreditor agreements
  6. Purchase price adjustments and earn-outs
  7. Indemnities: seller and buyer

Benefits

The panel will review these and other key issues:

  • What should the parties in an M&A transaction do to ensure that their closing requirements match those of the acquisition lender?
  • How might the deal terms and ultimate financing structure of the entity affect the terms of an acquisition loan?
  • What kinds representations and warranties will a lender require from the target company and how do MAC clauses come into play?
  • What provisions should be included in an acquisition agreement to anticipate indemnities and other post-closing requirements of the acquisition lender?

Faculty

Bandes, Anne
Anne I. Bandes

Partner
Morgan, Lewis & Bockius

Ms. Bandes represents leading financial institutions and borrowers in a variety of domestic and international...  |  Read More

Dugan, Terrence
Terrence L. Dugan

Partner
Morgan, Lewis & Bockius

With a focus on the energy and media sectors, Mr. Dugan advises clients on U.S. and international finance, project...  |  Read More

Schernecke, Matthew
Matthew Edward Schernecke

Partner
Morgan, Lewis & Bockius

Mr. Schernecke advises second lien and mezzanine investment funds on loans and other investment transactions with a...  |  Read More

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