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The growth of private credit can be traced back to the Great Financial Crisis of 2008-2009. In particular, new guidelines from the FDIC and Federal Reserve (among other governmental agencies) made it more difficult for banks to underwrite financings that resulted in debt-to-EBITDA ratios in excess of 6.0x.
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.
Acquisitions may involve other forms of financing, such as cash or debt. From the initial discussions to the final closure of the deal, the process requires careful planning, thorough analysis, and strategic negotiations. Negotiation and Purchase Agreement Following successful due diligence, the negotiation phase ensues.
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