Recent Developments in Acquisition Finance

October 02, 2017

A delicate balance has evolved over time in leveraged acquisitions with respect to the nature of the contractual relationship between a target and its owners, on the one hand, and the debt financing sources of the buyer, on the other. Sellers are typically eager for buyers to lock in sufficient committed debt financing in order to successfully complete an acquisition, while financiers are wary of any direct contractual relationship with the sellers and potential legal exposure to them in the event the financing falls through for any reason. A recent Texas Supreme Court decision, discussed in the attached article, has given parties in this context something new to consider, and provides a cautionary note. And a recent New York federal district court decision, also discussed in the attached article, has given parties to credit facilities a novel issue or two to ponder.

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