Term sheets in acquisition finance transactions

The terms of a leveraged buy-out financing will typically be extensively negotiated and clearly documented in a reasonably detailed term sheet (and accompanying commitment letter) prior to any formal finance documentation being drafted. The term sheet sets out key terms to be included in the finance documents; primarily the facilities agreement(s) and the intercreditor agreement.

The level of detail in an acquisition finance term sheet is typically higher than general purpose loans partly reflecting the need for certainty in a bidding environment, partly reflecting the high leverage context and the focus and intensity that private equity typically brings to negotiations.

For facilities which are intended to be syndicated, term sheets are generally agreed by the sponsor and main lead banks (often referred to as the ”mandated lead arrangers” or ”MLAs”). This guidance note outlines the key terms and commonly negotiated provisions of a term sheet for acquisition finance.

See Term sheets in acquisition finance transactions.