A reverse earnout is used to close a valuation gap between a buyer in a seller. In a normal earnout, a certain amount of the purchase price is withheld to be "earned" by seller after some time (usually 12 to 24 months) has passed post-transaction. The earnout is paid only if certain financial conditions are met such as delivering a...
Under unitranche financing, one lender provides the entire credit with a single set of documents. This can provide a number of benefits to the borrower as follows:
Simplifies the documentation and reduces the paperwork for borrowers because there is just one credit agreement and a single set of collateral documents.
Accelerates the acquisition process because buyers don't need to find and negotiate with two separate lenders for the senior and mezzanine debt. As well, since the loan documentation is much simpler, unitranche loans can be pulled together more quickly.
Saves the borrower money because only one agreement will need to be drafted and reviewed by a single legal team for the lender.
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