Bank Lending and Acquisition Finance

Borrowers press their advantage

The outlook for the credit market is largely stable. Almost half of the participants in a survey by the Loan Market Association (LMA) said they do not expect volumes to change much in the next 12 months. In acquisition finance, over half of the respondents identified a slightly positive trend. At the same time, alternative lenders are likely to increase their share of the market – partly because the ECB is scrutinizing banks and their lending business more carefully.

As lenders, traditional banks are under increasing pressure and are responding by offering more flexible conditions where possible – much to the benefit of borrowers, who are more than happy to take advantage of these favorable conditions. The trend at the banks themselves is towards cost reduction: legal departments are increasingly turning to legal tech solutions, while lawyers' hourly fees continue to sink.

Private equity flood lends firms a boost

Even among financing practices, the competition remains fierce. The huge pressure on costs in advising banks means more and more teams are trying to get a foot in the door on the borrower side. The flourishing private equity market is providing more opportunities here than it has for years – opportunities that heavyweights such as Latham & Watkins and ambitious outfits such as Gleiss Lutz know exactly how to use.

Linklaters poached Allen & Overy’s most important finance partner, Dr. Neil Weiand, while Taylor Wessing took on a respected team from the insolvent outfit King & Wood Mallesons. The biggest beneficiary of the revolving door, however, was Noerr, which won significant market presence following the arrival of an Ashurst partner last year.

Nobody, however, is making the mistake of relying too heavily on LBOs, as they did in the boom years. Instead, most market participants are trying to establish balanced teams that can straddle the interfaces between capital markets, funds, infrastructure projects and restructuring work.

 

This subchapter discusses those law firms which advise banks and companies, not just on normal loans but also on acquisition finance. The advisory work of law firms in all forms of debt finance, for example transactions initiated by private equity houses, is of particular interest here. Information concerning advice on real estate, project and ship finance can be found in the chapters ?real estate and ?energy law.