Sponsors Paying for Lender's Legal Fees

Is it market for Sponsors to pay the legal fees of their lenders? Every deal I have seen is set up that way. It seems like a stupid norm. The Sponsor has to pay top dollar so an expensive law firm can defend the interests of the lender and actively negotiate against the sponsor! The lender is incentivized to use a good and expensive law firm, because it helps them get better crafted legal documents, and they don't have to pay a dime, so who cares how much it costs? It is a double whammy.

Has anyone ever seen a Sponsor negotiate out legal fees during the term sheet phase of a deal? Might be a good way to get rid of this obvious conflict of interests.

 

Yes, every deal is set up this way. You can take the view that the lender is negotiating "against" the sponsor, but in practice, it's typically more collaborative to get an agreement everyone is comfortable with. Even big deals with syndication, there will be a bank involved to negotiate "for lenders" but whose sponsor is the actual client. So it's not quite as one sided for the lenders or antagonistic as sounds like you think.

 

Est sunt exercitationem laudantium dolorum. Ipsum suscipit aspernatur iste recusandae numquam. Deserunt ea quos dolorem qui non. Maxime velit reprehenderit sed voluptas est et rem necessitatibus.

Career Advancement Opportunities

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • Warburg Pincus 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

April 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (91) $281
  • 2nd Year Associate (206) $266
  • 1st Year Associate (387) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (314) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”