If your company is considering an acquisition, and it also happens to be a borrower under a credit facility, it is important that you review the credit documentation to ensure that the acquisition will not result in a breach of any of the provisions. Here are seven key questions to ask when identifying possible issues under the credit documentation when undertaking an acquisition:
- Is the acquisition permitted under the credit agreement? Most credit agreements contain negative covenants that may prohibit acquisitions without consent of the lenders, or may allow only certain types of permitted acquisitions.
- Does the credit agreement permit