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Timing Not Right for That Investment Opportunity? Bridge Loans to the Rescue!

February 22, 2022

Bridge loan facilities are short-term loans that are used by borrowers until they are able to secure permanent financing for an acquisition. In the private funds context, private equity funds use bridge financing as a tool to provide the immediate cash necessary to complete transactions in advance of calling capital from fund investors. Many mid-market and large-market mergers and acquisitions require the acquiring party to provide proof of financing to quickly complete a transaction; however, purchasers may have a hard time putting long-term financing in place before closing. An acquirer may thus bridge the gap by obtaining the short-term or “bridge” financing necessary to sign a purchase agreement, and then securing long-term financing once the acquisition has been consummated.

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