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Bridge Loan Boom? Brace Yourselves for a Busy Autumn!

September 08, 2021 (1 min read)

In the past, private equity funds made frequent use of bridge financing as a tool to provide cash necessary to complete fast-moving transactions. As bridge financing grew in popularity, competition in the bridge lending space resulted in more market participants and a reduction in lending rates. And though the COVID-19 pandemic and associated economic downturn temporarily stalled the use of bridge financing, demand is predicted to come roaring back this fall. A growing volume of leveraged buyouts and acquisitions, up 152% from the same period in 2020, is generating a bridge financing boom, driven by cheap borrowing costs and pent-up demand. Read this practice note to prepare for the surge in market activity and to understand how bridge financing continues to play a critical role in private equity investments.

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Related Content

  • Private Equity Investment Structures
    Read this practice note that covers characteristics of private equity investments, including negotiation of investments, control and liquidity rights, financing, capital structures and exits.
  • Term Sheet for a Private Equity Fund
    Review this form term sheet to understand how bridge financing transactions are disclosed to prospective investors in a private equity fund, and the limitations generally imposed on these transactions.
  • “American” Style Waterfall Clause
    Consult this example of a deal-by-deal waterfall to see when (and in what order) proceeds of bridge financings and other investments are returned to limited partners in a private equity fund.

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