Purpose. How buyouts are financed: the instruments (revolvers, term loan A and B, first and second lien, unitranche, high-yield bonds, HoldCo PIK, preferred equity), how they are priced and documented (covenant-lite, EBITDA add-backs, call protection, incurrence baskets), how sponsors use them after closing (repricings, add-ons, dividend recaps), and how documentation flexibility turned into the liability management exercises (LMEs) that have redefined creditor rights since 2016.
What the study covers
- 1Why debt is the engine (and the risk) of a buyout
- 2The markets that finance buyouts
- 3The instruments in one page
- 4Covenant-lite and the documentation revolution
- 5Pricing a leveraged loan: the components
- 6The sponsor's post-closing financing playbook
- 7Capital structure design: the questions
- 8Real-world reference points
- 9Common pitfalls
- 10How an expert thinks about it
Technical exhibits
Worked examples, checklists and case studies included with this study.
Capital Structure Stack
The stack from RCF to preferred equity: pricing, leverage, covenants, call protection, priority, holders
Lme Primer
Liability management exercises: drop-downs, uptiers, double-dips; J.Crew, Serta, Chewy/PetSmart, Envision, Incora, Mitel; blockers and co-ops
Dividend Recap Worked Example
A tied numerical recap on the Project Keystone LBO: IRR up, MOIC down, credit stats
Pik Toggle Mechanics
PIK and PIK-toggle notes: accretion math, toggle elections, AHYDO, where they sit, why they spike in stress
Covenants and Documentation
Maintenance vs incurrence, cov-lite, EBITDA add-backs, baskets, MFN, portability, and the clauses that enable LMEs