Pandemic-Related Deal Litigation Highlights Buyer Leverage in Transactions Requiring Debt Financing

Cooley M&A

The decisions from the court on those preliminary matters, as well as the arguments raised by legal counsel, offer some valuable lessons for sellers considering sale transactions that require debt financing, and may motivate sellers to re-evaluate certain provisions and remedies that have become customary in those transactions. In other words, the specific performance remedy is conditional, and neither buyer nor the sponsor can be forced to close without the debt financing.

What Are M&A Sources of Capital?

Benchmark Report

First, the financing needs to be raised with consideration of the company's operating cash flows. For example, if the business uses debt financing, it should have sufficient funds to cover the interest and repay the debt.

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Elon Musk Races to Secure Financing for Twitter Bid

NYT M&A

The world’s richest man is trying to shore up debt financing, including potentially taking out a loan against his shares of Tesla, so he can buy Twitter for $43 billion.

Stellus Capital Management, LLC Provides Unitranche Financing in Support of Summit Park’s Acquisition of Curion

Business Wire M&A

HOUSTON--(BUSINESS WIRE)--Stellus Capital Management, LLC (“Stellus”), a leader in middle market direct lending, announced today that its affiliates provided senior debt financing and an equity co-investment in support of Summit Park’s acquisition of Curion Holdings, LLC (“Curion” or the “Company”).

Stellus Capital Management, LLC Provides Unitranche Financing in Support of Bansk Group’s Acquisition of amika and Eva NYC

Business Wire M&A

HOUSTON--(BUSINESS WIRE)--Stellus Capital Management, LLC (“Stellus”) announced today that its affiliates provided senior debt financing and an equity co-investment in support of Bansk Group’s (“Bansk”) acquisition of amika and Eva NYC, two of the fastest-growing scaled independent haircare brands in the U.S.

What Is Optimal Capital Structure?

Andrew Stolz

The optimal capital structure of a firm is the right combination of equity and debt financing. Debt financing may have the lowest cost, but having too much of it would increase risks to the shareholders. Cost of debt. Definition of Optimal Capital Structure.

Stellus Capital Management, LLC Provides Unitranche Financing in Support of Blue Sage Capital’s Acquisition of Baker Manufacturing Company, LLC.

Business Wire M&A

HOUSTON--(BUSINESS WIRE)--Stellus Capital Management, LLC (“Stellus”), a leader in middle market direct lending, announced today that its affiliates provided senior debt financing and an equity co-investment to support Blue Sage Capital’s (“Blue Sage”) acquisition of Baker Manufacturing Company, LLC (“Baker” or the “Company”).

Episode #9: Interview with Jed Fochtman | Part 1

Quantive

“What should business owners consider when taking on debt?” ” We’re talking about the ways small companies find debt financing and the terms and conditions they should be aware of with Jed Fochtman of Capital Advisors LLC.

Episode #9: Interview with Jed Fochtman | Part 2

Quantive

“What should business owners consider when taking on debt?” ” We’re talking about the ways small companies find debt financing and the terms and conditions they should be aware of with Jed Fochtman of Capital Advisors LLC.

Episode #9: Interview with Jed Fochtman | Part 3

Quantive

“What should business owners consider when taking on debt?” ” We’re talking about the ways small companies find debt financing and the terms and conditions they should be aware of with Jed Fochtman of Capital Advisors LLC.

Episode #9: Interview with Jed Fochtman | Part 4

Quantive

“What should business owners consider when taking on debt?” ” We’re talking about the ways small companies find debt financing and the terms and conditions they should be aware of with Jed Fochtman of Capital Advisors LLC.

Surge Closes Amuze Products and Bar Partners Merger

Business Wire M&A

The transaction, valued at around $50MM, closed with debt financing provided by Woodforest National Bank and BakerHostetler acting as lead counsel. DALLAS--(BUSINESS WIRE)--Surge Private Equity LLC (“Surge”) announces its investment in Bar Partners, Inc. (“Bar

Elon Musk secures $46.5bn to fund possible hostile bid for Twitter

The Guardian M&A

Tesla CEO is putting $21bn of his own money in the package, according to US watchdog filing Elon Musk has secured $46.5bn (£35.6bn) in financing to fund a possible hostile bid for Twitter and is putting up $21bn of his own money as part of the package.

How Elon Musk Managed to Convince Banks For Financing Proposed Twitter Deal?

Benzinga

million in debt financing to buy Twitter, Inc. The banks were apparently impressed by Musk's plan to increase Twitter's debt without taking the company's credit rating to junk levels, the report said, citing.

What is the Modigliani–Miller Theorem?

Andrew Stolz

The first proposition of the M&M says that the value of leveraged firms (capital structure with a mix of debt and equity) and unleveraged firms (capital structure with only equity) are the same. When debts increase in a company, there are more chances of going default.

Funding a Deal: The Capital Stack Explained

Scott Mashuda

THE CAPITAL STACK When it comes to deals, debt is cheaper than equity when it comes to deals. These layers, comprised of debt and equity, are the funding sources that go into making an acquisition. Fundamentally, debt and equity are functions of risk and reward within a capital stack.

Proactive news headlines including Lake Resources, Wiluna Mining Corporation, Kazia Therapeutics and Artrya Ltd

Benzinga

Sydney, June 17, 2022 (GLOBE NEWSWIRE) -- Proactive, provider of real-time news and video interviews on growth companies listed in Australia, has covered the following companies: Lake Resources NL ((ASX:LKE, OTCQB: LLKKF ) has appointed two leading project finance institutions, Citi and J.P. Morgan, as joint coordinators of the proposed debt finance package of its flagship Kachi Lithium Project in Argentina.

Permira Completes Acquisition of Mimecast

Benzinga

Blackstone Credit and funds managed by Ares Management Corporation's Credit Group provided committed debt financing to the Permira funds. LEXINGTON, Mass., May 19, 2022 (GLOBE NEWSWIRE) -- Mimecast Limited ("Mimecast") today announced the completion of its acquisition by funds advised by Permira for approximately $5.8 billion or $80.00 per share in cash.

What This Recession Means for M&A

Class VI Partner

Another pressing question—how will the rising interest rate environment impact lenders’ willingness to stretch their debt multiples in a recessionary M&A market?

MKS Instruments Announces Closing of Atotech Acquisition

Benzinga

As a result of higher interest rates on debt financing compared to the time the transaction was originally announced in July 2021, as well as the impact of the current macroeconomic and inflationary environment on our business, MKS currently anticipates the acquisition will be accretive to Non-GAAP diluted net earnings per share for the full fiscal year 2024. Positions MKS to Optimize the Interconnect SM – the Next Frontier for Electronic Device Miniaturization and Complexity.

Have Your Cake, and Closing Too: Invoking Prevention Doctrine, Delaware Chancery Court Grants Seller’s Request for Specific Performance in COVID-Related M&A Dispute

Cooley M&A

In reaching this order, the court applied the prevention doctrine, finding that the unavailability of buyer’s debt financing did not permit buyer to circumvent its obligation to close because buyer materially contributed to the debt financing being unavailable. As is typical in a leveraged buyout, the receipt of debt financing was a condition to seller’s right to obtain specific performance of buyer’s closing obligation.

DEBRA, next big tax reform in Europe?

Simply Treasury

The idea is not new to encourage companies to increase their capitalization and reduce their bank debt (partly through more recourse to the capital market - CMU project). DEBRA Proposal (« Debt-Equity Bias Reduction Allowance).

The Twitter Buyout: Is Elon Musk a Madman or a Genius?

Brian DeChesare

Spotty Cash Flows: Twitter’s margins and cash flows have been highly inconsistent, and in the next two projected years, they do not cover the interest expense on the $25 billion in Transaction Debt (16x projected EBITDA!). 17:36: Part 4: Cash Flows and Debt Repayment.

The Causes and Consequences of Repurchasing Shares

Reynolds Holding

However, if reducing agency costs were the primary motive for repurchases, then repurchases would not have causal effects on investment and would not require debt financing, as other research shows (Almeida, Fos, and Kronlund, 2016; Farre-Mensa, Michaely, and Schmalz, 2021).

Radius Health Announces Agreement to be Acquired by Gurnet Point Capital and Patient Square Capital

Benzinga

June 23, 2022 (GLOBE NEWSWIRE) -- Radius Health, Inc. ("Radius" or the "Company") (NASDAQ: RDUS ) today announced that it has entered into a definitive agreement to be acquired by Gurnet Point Capital ("Gurnet Point") and Patient Square Capital ("Patient Square") in a transaction valued at approximately $890 million, including the assumption of debt and assuming full payment of the CVR (Contingent Value Right).

How to Find a Technology Services Firm to Buy: I Can’t Find the “Right Fit” to Acquire

IT Valuations

This is particularly important if the buyer is obtaining debt financing.). The wisdom you’ll receive from a great tax adviser will help the overall finances be the most efficient, as well as offer you cost savings. Like Goldilocks and her quest for the perfect bowl of porridge, the mythical “perfect fit” isn’t possible, but finding the “right fit” is very necessary. The “right fit” is a deeply personal definition.

How To Read A capitalization table (A Cap Table)?

Equilest

Here is the list: Debt: Debt is money a company has borrowed and must pay back with interest over time. The debt helps investors to understand how much the startup owes to banks and other lenders. . Convertible debt. Convertible debt is debt financing that can be turned into equity later. Convertible debt has clear rules about what conditions need to be met to turn the debt into equity.

Targa Resources Corp. to Acquire Lucid Energy from Riverstone Holdings and Goldman Sachs Asset Management for $3.55bn; Provides Updated 2022 Standalone Financial Outlook

Benzinga

Fully cash and debt-financed transaction; expect pro forma year-end 2022 leverage ratio around 3.5 The strength of Targa's standalone financial position has afforded us the flexibility to consider attractive opportunities to grow our business through acquisitions, as evidenced by our ability to finance the purchase of Lucid utilizing available cash and debt with estimated pro forma year-end 2022 leverage around 3.5

How to Value a Website or Internet Business in 2022

FE International

Debt-financed investors. A rarer breed but similar to ROI-focused investors, those parties using debt to acquire an internet business will usually have a ceiling valuation multiple in order to repay the principal and interest on their loan.

Delaware Puts the Conduct of Business Covenant on Center Stage in COVID-Related M&A Dispute

Cooley M&A

billion, a portion of which was to be funded with third-party debt. In February 2020, Mirae was close to executing a debt financing commitment when title issues were discovered by the lenders, suggesting that the target hotels were the subject of a larger fraudulent scheme perpetuated by “a shadowy and elusive figure named Hai Bin Zhou”.

Social Distancing From a (Supposed) Life Partner: Early Lessons From Deals Terminated and On the Rocks in the COVID-19 Era

Cooley M&A

The return of the financing out? Once upon a time, it wasn’t unusual for buyers (particularly financial sponsors) to push for financing conditions that allowed them to back out of an announced deal if they used sufficient efforts to seek financing but came up short.