Debt for the deal you are buying, from senior and unitranche to mezzanine and second-lien financing for buyouts and recapitalizations, with covenant and security terms that survive diligence and a downturn alike.
An acquisition is financed on a bet that the business being bought will throw off enough to service the debt that bought it. Two things price that bet before any lender does. The tax code: Section 163(j) caps deductible interest at 30 percent of adjusted taxable income, computed again on an EBITDA basis for tax years beginning after 2024, so debt above that line costs after-tax dollars. And the documents: covenant package, security, and intercreditor terms decide how the structure fares when the forecast misses.
We act for sponsors and corporate acquirers, and for the banks and credit funds that lend to them, never on both sides of one deal. The documents run from the commitment letter, drafted to the certain-funds standard a seller will accept, through the credit agreement's baskets and cure rights to the intercreditor agreement that ranks the lenders under stress.
A buyout rarely lives in one jurisdiction. Security must be taken where the collateral sits, and a UK public target must re-register as a private company before its assets can secure the debt that bought it. Locally admitted counsel joins at the first draft.
Senior secured term and revolving facilities, and unitranche financings that blend senior and subordinated debt into a single tranche. This is the core debt that funds the purchase price and the working capital behind it.
Subordinated, mezzanine, and second-lien layers that bridge the gap between senior debt and equity, structured with the priority, payment, and warrant terms that price the additional risk each junior lender takes.
Commitment letters, term sheets, and the credit agreements that follow, including the certain-funds mechanics a sponsor needs to bid and the conditions, representations, and undertakings a lender needs to commit.
The financial covenants, baskets, carve-outs, and cure rights that govern how the business is run while the debt is outstanding, drafted to give the borrower headroom and the lender control, and calibrated to the deal.
Guarantees, share and asset security over the target group, and the intercreditor and subordination terms that decide who is paid first under stress, all negotiated with the enforcement day in view.
The conversations that follow closing, including amendments, add-on financings, refinancings, and the covenant-reset or workout discussions when a forecast misses, handled by the team that drafted the documents in the first place.
A subsidiary that guarantees its parent's acquisition debt receives little for it, so the guarantee can be avoided as a fraudulent transfer if the subsidiary was insolvent or left undercapitalized: within two years under the Bankruptcy Code and usually four under state law. Savings clauses cap each guarantee at the amount that survives the test.
A covenant-lite term loan has no maintenance covenant; the only financial test sits in the revolver and springs to life when drawings cross a set share of the commitment, often around a third. Until then the lender's protection is the incurrence covenants, the baskets that limit new debt, and the EBITDA definition that feeds them.
A lien on a Delaware borrower's general assets is perfected by a UCC-1 filed in Delaware, wherever the assets sit; a pledge of certificated shares is perfected by holding the certificates with a stock power, and an uncertificated LLC interest by control or filing. Each class of collateral has its own method, hence the checklist.
A unitranche facility is one loan at one rate to the borrower, but the lenders divide it into first-out and last-out pieces under an agreement among lenders that sets the interest skim, the voting, and who may enforce. The borrower is not a party and may not know who can waive a default.
Under SunGard provisions, the only representations whose breach can block funding at closing are a short list about the borrower itself and those in the purchase agreement whose breach lets the buyer walk. The material adverse change test is the seller's definition, not the bank's, and the conditions precedent are listed in the commitment letter.
Commitment papers give the arrangers market flex: the right to raise the margin, add original issue discount, or tighten terms if syndication needs it, with the fee letter setting the caps. A sponsor reads the flex as part of the price, since the flexed terms are the ones the credit agreement will carry.
The bid needs committed debt with almost no outs. Commitment letters, term sheets, and fee letters are negotiated to the certain-funds standard, so the seller sees financing that will fund on completion, with no conditions hiding in it.
Senior, unitranche, second-lien, and mezzanine layers are sized against the target's cash flow, and the holding and acquisition structure is built tax-aware across every jurisdiction the group touches. Each layer's priority and price is fixed before long-form drafting begins.
The credit agreement's covenants, baskets, carve-outs, and cure rights are negotiated line by line, while the intercreditor agreement settles who enforces, who stands still, and who is paid first. This is where the deal's downside economics get written.
Funds flow on completion day against a conditions-precedent list run to the minute, and share and asset security is perfected wherever the collateral sits. Then the documents live on through add-ons, amendments, refinancings, and the covenant-reset call when a forecast misses.
The rate prices the good years. The intercreditor agreement writes the bad one.
Leveraged finance is the debt used to fund an acquisition, buyout, or recapitalization where the borrower carries a high ratio of debt to equity. The repayment case rests on the target's cash flow and, often, on the value realized at exit, so the documents are written to control how the business is run and how the debt is serviced through the life of the deal. Senior, unitranche, mezzanine, and second-lien layers are combined to fit the price, the cash flow, and the risk each lender will accept.
Both, on different deals. For private-equity sponsors, corporate acquirers, and management teams we negotiate the commitment papers, the credit agreement, and the security package from the borrower's side; for banks, credit funds, and direct lenders we draft them from the other. The chair is chosen at the outset of each matter and disclosed, and the conflict check runs against the target group as well as the parties, since a portfolio company of one client is often the target of another. What carries across is the drafting, because a basket is read in a workout by people who were not in the room when it was written.
They are layers of the capital structure ranked by priority and price. Senior debt is repaid first and is the cheapest. Second-lien and mezzanine sit behind it and cost more for taking more risk. Unitranche blends senior and subordinated debt into a single facility, with the priority split handled privately between lenders by an agreement among lenders. The mix is chosen to match the purchase price, the target's cash flow, and the appetite of the lenders in the deal.
Covenants are the promises that govern how the borrower runs the business while the debt is outstanding: limits on further borrowing, distributions, asset sales, and acquisitions, plus financial tests such as leverage and interest-cover ratios. They are how a lender keeps control between drawdown and repayment, and how a sponsor preserves the headroom to operate. The negotiation of baskets, carve-outs, and cure rights is where much of the value in a deal is won or lost.
Security gives the lenders a claim over the target's assets and shares if the borrower defaults, and the intercreditor agreement decides who is paid first when more than one class of lender has a claim. In a leveraged deal these documents decide the economics under stress, so the ranking, enforcement standstills, and payment waterfall are negotiated with the same care as the headline pricing.
Yes. From Chicago, London, and Dubai we coordinate security, guarantees, enforcement, and tax across the onshore and offshore jurisdictions a buyout touches, including holding and acquisition structures in centers such as Luxembourg and the Cayman Islands. Where local-law security or counsel is required, we coordinate with locally admitted counsel so the package holds together as one.
Fund-side and borrower-side counsel for direct lenders and credit funds, covering bilateral and club facilities, unitranche, and the documentation behind non-bank lending.
Explore →Growth and venture debt for high-growth and venture-backed companies, including term loans, warrants, and covenant terms written for a business that is still growing into its revenue.
Explore →Revolving and working-capital facilities secured against receivables, inventory, and other current assets, with the borrowing-base mechanics and the controls a lender relies on.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
One partner is accountable for the whole matter, and you have that partner's direct line. Chicago, London, and Dubai work to the same standard.