Strategic Acquisition Finance
The Strategic Acquisition Finance department of a bank provides financing for structured acquisitions. Its clients are large French or international companies carrying out mergers or takeovers that require a structured financing solution.
The Acquisition Finance department is responsible for studying and obtaining approval from the bank’s risk department for the financing requested by its clients: Analysis of the company and the planned transaction; modeling of cash flows (of the acquirer, the target, and acquirer + target); structuring of the financing (and its refinancing - see below); presentation of the file to the risk department, etc. Assisted by its lawyers, this department is also responsible for negotiating the loan agreement with the clients.
Given their significant size (deals can range from hundreds of millions to several billion euros), acquisition financing is generally distributed among several banks. This is known as syndication. In addition, such big deals are usually refinanced in whole or in part, often on short notice, through market transactions such as bond issues, capital increases or convertible bond issues.
The Acquisition Finance department works closely with the departments in charge of market financing (ECM – Equity Capital Markets and DCM - Debt Capital Markets) to offer the client a financing structure that combines bank financing and market financing. The rating advisory teams are also involved, since structuring acquisition operations generally has an impact on the credit rating of the acquiring company.