The past 18 months have seen a convergence between the US and European markets in an important area of leveraged acquisition finance transactions. Unusually, it is the US market that is moving closer to European market norms.
All of the excitement has focused on the conditions to which the availability of finance for leveraged acquisitions is subject. In Europe, it is now customary for leveraged buy-out borrowers to get ‘certain funds’ commitments from their banks. Market practice in the US is moving closer to that position. The result is a shift in the allocation of risk between borrowers and financiers, resulting in a more equitable alignment of interests in so far as risk is concerned.
