M&A and corporate finance in general is one of our core competences as legal advisors. We provide strong, commercial solutions – always based on the circumstances of each case.
Finance
Our acquisition finance lawyers are experts in their field. They work closely together with our M&A lawyers to ensure a structured and seamless acquisition process from A to Z.
Acquisition finance options
Several options are available when it comes to financing a business transfer. Each individual finance form has its own pros and cons, and our advice is based on the circumstances of each case.
If you have your eyes set on a business but need capital to buy it, one option would be to talk to the seller about seller financing. With seller financing, you can finance the acquisition and then repay over a period of time. The financing deal may be structured as an ordinary credit agreement where you pay a fixed amount over an agreed period of time until you have repaid the price of the business.
Another option is to use a seller finance solution which is tied to performance. This solution is known as an earn-out and means that the amount to be repaid depends on the performance of the business. The buyer will then pay a percentage of profits, as agreed with the seller, until the debt has been repaid.
Private equity funds typically finance acquisitions through LBOs (Leveraged Buyouts). The total price is financed by a relatively large part of the interest-bearing debt coming from banks and other financial institutions instead of subordinate loan capital (equity) from the buyer itself. Thus, the business is said to be highly geared (with a large portion of total financing consisting of debt).
We advise private equity funds, banks and financial institutions about LBOs and LBO models (valuation models).
Buyer finance means that the acquisition is financed by you as the buyer. This can be done in a number of ways:
- Bank loans
- Bilateral and syndicated loans
- Investors and partners
- Crowdfunding
We can advise you on the financing form which is best for you. Regardless of which financing form you opt for, you will be more likely to obtain loan capital if you can present a well-prepared business case. In the business case, you address some very central questions which may help you clarify any uncertainties that the lender(s) may have. Such uncertainties could include:
- Market developments
- Growth potential
- Market competition
- Product development and expansion opportunities
- Prospects of generating a profit
- Exit strategy
We can assist you in developing a compelling business case.
A mezzanine loan combines debt and equity financing. Also referred to as subordinated debt, a mezzanine loan is more risky since it is not secured by collateral unlike, for example, a bank loan. The interest payable varies with the performance of the business acquired.
In Denmark, the product is available from the finance provider Mezzanin Kapital, but other financial institutions also provide finance on mezzanine-like terms. One of the conditions for being granted a mezzanine loan could be that the lender joins the board of directors of the business and thus becomes very involved in the management of the business.
Our M&A services
We advise on all aspects of M&A. Please click here for more information on our legal services and how we can assist you.
