Deal funding
must reach closing.

01

Financing is designed with the acquisition structure

Identify borrower, acquisition vehicle, equity cheque, post-closing debt location, currency, tax, distribution limits and the operating group’s debt-service capacity. Price, deferred consideration, earn-out and refinancing sit in one sources-and-uses table.

BidCo

Acquires the asset and commonly incurs acquisition debt.

Target

Does not automatically fund its own purchase merely because it joins the group.

Sponsor

Contributes equity and carries cost-overrun risk.

Cash flows

Must move lawfully to the borrower through tax, covenant and distribution constraints.

02

The financing term sheet precedes an irreversible SPA

Align commitment, availability, interest, fees, amortisation, prepayment, security, covenants, defaults and drawdown conditions with the SPA. Long-stop dates, permitted deal changes and bank walk-away rights must match.

03

Each source has a defined place in the waterfall

Senior debt takes priority and broad security; mezzanine bears more risk and needs subordination; vendor debt or deferred price supports seller claims; sponsor equity funds before or with bank debt. Repayment rules must not conflict.

Senior

Priority, draw control and the broadest security package.

Mezzanine

Risk pricing, subordination and enforcement limits.

Vendor

Deferred price, holdback or seller loan.

Equity

Quantum, evidence of funds and contribution timing.

04

The security package starts with an asset and consent map

Test ownership, third-party debt support, corporate and regulatory consents and perfection. The package may cover equity, accounts, contracts, movables, real estate, receivables and independent guarantees.

05

An LLC participation-interest pledge needs notarisation and registration

Article 22 of the LLC Law requires a notarised pledge agreement and state registration; the charter may prohibit third-party pledge or require participant consent. For shares, address custody records, voting, dividends, new issues and enforcement.

LLC

Charter, consent, notarial form and registry entry.

JSC

Registrar or depositary, voting and income rights.

Future interest

Documents must address when the collateral is acquired.

Enforcement

Model the sale route and required approvals before signing.

06

Upstream and cross-stream support needs its own justification

Russian law has no single general rule automatically prohibiting target-group security for acquisition debt. Each guarantee or pledge is nevertheless tested for authority, corporate benefit, major and interested-party rules, financial limits, regulatory approvals and insolvency challenge risk.

07

Escrow links payment to a verifiable event

A bank blocks funds and releases them when the agreed conditions occur. M&A terms should define evidence of title transfer, clearances, release of existing liens, partial release and return if closing fails.

08

Covenants protect credit without freezing the business

Cover debt service, leverage, distributions, additional debt, asset disposals, acquisitions, related-party dealings, insurance, reporting and compliance. Cure periods, equity cure and baskets should fit the real operating cycle.

09

Multiple lenders need one ranking

The intercreditor agreement sets priority, payment waterfall, payment blocks, standstill, instructions to the security manager and enforcement proceeds. Article 356 allows a security manager to act for several creditors.

10

Conditions precedent should be a finite document list

Assemble corporate approvals, legal opinions, regulatory decisions, KYC, equity evidence, security, insurance, old-debt repayment and an agreed funds flow. Separate signing, drawdown, closing and post-closing items.

11

Funds flow is the key closing-day document

Sequence sponsor equity, drawdown, old-debt repayment, lien release, seller payment, holdbacks, tax and fees by the minute. Each payment identifies account, currency, owner, evidence and the gate to the next step.

T-1

Verify accounts, balances, signatures and bank availability.

Closing

Synchronise money, title and releases.

Holdback

Separate rules for escrow, warranty and disputed amounts.

Evidence

SWIFT, statements, registry records and closing memorandum.

12

Enforcement is planned before the first default

Distinguish defaults from ordinary variances and acceleration from immediate enforcement. Test notices, cure, lender majority, standstill, realisation route, valuation, regulatory approvals and insolvency consequences.

13

Acquisition-finance design pack

Group and deal structure; SPA or term sheet; sources and uses; model; existing debt and security; charters; assets and licences; accounts; material contracts; approvals; lenders; currency and hedging; tax model; closing timetable.