Mergers and acquisitions are often carried out with a debt-financing component. Its share may reach up to 80-90 % of the acquisition cost. Such transactions are then referred to as leverage finance. Entities providing debt financing do not constitute a homogenous group and they differ depending on the level of risk and margin they are ready to accept.
In the case of the leverage finance transactions financing is usually provided to a special purpose vehicle (SPV) that acquires shares in a target entity. Following the acquisition, SPV is usually merged with the target entity. As debt financing is to be repaid from cash-flows generated by the target entity, finance documentation provides for a number of obligations and restrictions in respect of the business activity of the target company and SPV.
In respect of acquisition finance, our lawyers have large experience as external legal advisors acting for banks and private equity houses. Selected projects carried out in Poland in relation to which our lawyers have advised include:
- acquisition of an aircraft maintenance company (MRO) by a Polish industry investor
- acquisition of assets from a retail trade sector by a Polish industry investor
- acquisition of a confectionery and chocolate products manufacturer by a private equity fund
- acquisition of a supplier of transmission services by a private equity fund
- acquisition of an educational publishing house by a private equity fund
- acquisition of an animal feed manufacturer by a private equity fund