Leverage Transactions: Propelling EO Deals

January 2, 2024

Those involved in corporate transactions have witnessed the emergence of leverage transaction teams or what’s colloquially referred to as £1 Charlies in recent years.

Leverage transactions were very popular in the early 2000s, driven by the availability of Asset Based Lending (ABL) facilities and normal levels of insolvency processes. However, the more recent approach of these corporate buyers is to target profitable businesses to acquire, based on ABL facilities, vendor funding and little or no funding from the buyers’ own resources.

When these potential deals are compared with the option to complete an EO transaction, they quickly fall away. The structure proposed by the leverage buyer can often be replicated by an EO transaction but with a broad range of additional positive outcomes.

We have a specific example of a proposal by a leveraged buyer, where our client felt they were taking no risk, which drove the decision to consider and effect a sale to EO.

Get in touch here if you’d like to talk more about this topic.