HandbookProtections
What is the funding behind the buyer?
What it means and how to read it on a deal.
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Tracking Alpha
What it is
Who stands behind the company that signed as buyer, which is often one formed just for the deal.
On the site asSponsor equity commitmentParent guaranteeBuyer's own cash and debt
How to read it
A checklist line:
- Sponsor equity commitment
- A sponsor or investor committed equity to the buyer in a letter, sometimes with a limited guarantee.
- Parent guarantee
- A parent or affiliate guarantees what the buyer must pay.
- Buyer's own cash and debt
- The buyer or its parent pays from its own cash, credit lines or debt it arranges.
A bare statement that the buyer will have enough money doesn't count as saying where it comes from.
