Welcome to the July 2024 edition of In the Know, Baker McKenzie's Leveraged Finance newsletter that analyzes significant trends and salient legal issues for participants in leveraged finance and high-yield markets around the globe.

Faced with a challenging deal-making environment, volatile geopolitical backdrop and rising cost of capital, dealmakers are increasingly concerned about risks inherent to the closing mechanics of complex acquisitions. In acquisition finance, there is scrutiny to ensure committed funds arrive on time and utilization mechanics adapt to facilitate funds flow and not vice versa. In this edition of In the Know we look at developments in pre-funding structures and documentation in both the syndicated and private credit markets.

Key Takeaways

  • Pre-funding is increasingly common to adapt utilization mechanics to deal dynamics, but market participants need to be aware of the risks pre-funding may pose to their interests.
  • A number of commercial and legal issues should be addressed in the documentation to ensure the parties are clear on how pre-funding works in practice and what happens if the transaction does not proceed as planned.


*A version of this article first appeared in the June 2024 issue of Butterworths Journal of International Banking and Financial Law.

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