Debt is that which is owed, an obligation to repay principal. Debt is used in a corporate finance contact by a business to finance operations, growth or a transfer of ownership. Some companies and corporations use debt as a part of their overall corporate finance strategy. Debt is a secured obligation that requires the borrower to repay the principal amount and interest at specified periods. It has a term and usually there are covenants that must be complied with.

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.

Debt

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