FAQ

WHAT IS THE FUNDS FLOW?

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Once a deal is signed, there is still a lot of work that needs to be done before the transaction can be completed at Closing. One crucial task is building a schedule that lists all the cash wires that need to be executed "at Closing" by different parties to ensure the acquisition vehicle (also known as BidCo) can acquire the shares of the Target Group, refinance existing debt, and pay all transaction costs incurred. On the morning of Closing, when all parties acknowledge that all conditions are satisfied, the lawyers conclude that "the funds flow may commence," allowing the cash to start moving from the buyers/new lenders to the sellers/existing lenders.

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HOW CAN THE COMPLEXITY OF FUNDS FLOW BE EXPLAINED?

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The Funds Flow process can be a complex undertaking due to several reasons:

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1. The number of wires involved can range anywhere from 75 to 200, which can be overwhelming and require meticulous monitoring and execution.

2. There is a need to collect and manipulate multiple bank details accurately and securely, without any errors.

3. The individual amounts and cash buffers involved can change multiple times before being finalized, and the order of wires may also need to be adjusted.

4. Multiple bank accounts from different banks in various countries, such as Luxembourg, UK, France, etc., may be involved, including BidCo, MidCo, HoldCo, TopCo, Target Group, and more.

5. The Funds Flow needs to circulate multiple times, with all parties and counsels involved needing to sign off on each iteration.

 

Navigating these challenges requires expertise and experience, and that's where The Deal Execution Group comes in to help you navigate the complexities of the Funds Flow process.

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CAN YOU GIVE US A QUICK GLOSSARY?

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• Transaction Signing: The Signing of a transaction is the point at which a deal becomes public, and the Buyers and Sellers agree on what is being purchased/sold and for what amount. It occurs before Closing.

• Closing: The Closing is the moment when the Buyers become the official owners of the Target Group, and the Sellers are paid in cash.

• Target Group: The Target Group refers to the entities that are acquired, directly or indirectly, and constitute the acquisition made by the Buyers.

• IBANs: IBAN stands for International Bank Account Number, and it is the standard used across Europe, including the SEPA (Single Euro Payments Area), which covers 28 European countries and eight others, including Norway and Switzerland. This payment standard is easy to validate mathematically, which is done through the Deal Execution Platform for added security. Non-IBAN bank account details can also be processed.

• Financing/Refinancing: Although not a requirement, many deals involve the use of debt, with Buyers taking advantage of the transaction to raise additional funds and repay existing debt.

• Funds Flow Bank: Executing all the cash wires during the morning of Closing is a challenging task, so one bank is usually designated as the Funds Flow Bank to handle all the wires. Typically, the bank of the Agent for the new financing performs this function, although it can vary.