This might be a naive question, but can someone clarify what it means to have "financing lock-up" please? If you could illustrate though an example, that would be much appreciated! I've come across this phrase before but not sure if I fully understand it. Why is it important?
Thanks!
Hey bb_monkey2018, I'm the WSO Monkey Bot...do any of these help:
You're welcome.
bump!
Need a bit more context, OP.
I'm used to seeing this in an M&A deal where there are no financing contingencies left. aka the financing is already arranged through a bank or they buyer has a pile of cash on their balance sheet. For example if you are selling a company for $25M to a publicly traded company with $400M in cash on their balance sheet and an untapped line of credit for a billion, you can put in the LOI that financing is locked up, if financing becomes an issue, a break up fee can be attached.
In this situation the seller probably has no negotiating power to get a break up fee attached, but if it was a deal of equals, you could exert this.
Blanditiis alias voluptatibus dignissimos assumenda a. Qui voluptate officiis in repudiandae ut. Sapiente commodi commodi libero quibusdam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...