The full effect of the Leveraged Lending Guidance on acquisition financing for private equity sponsors is not yet known.  However, even at this early date we can make a highly unscientific forecast of some winners and losers as a result of the Guidance:


  • Unregulated lenders—they will likely increase market share as they are not themselves subject to the Guidance and can provide certainty and momentum in the context of the broader deal
  • Strategics—on balance the Guidance may make sponsors less competitive in auctions against strategics and other potential bidders for businesses where high leverage multiples are necessary to make the math work
  • Equity underwriters—IPOs in many cases may be a more attractive exit option for sponsors with assets to sell than a secondary buyout if exit sale multiples would be adversely affected by the Guidance
  • Sponsors who traditionally don’t use high leverage multiples or aggressive loan structures—for them not much will change


  • Sponsors accustomed to high leverage multiples and aggressive loan structures—they may not be able to get  from any lenders (regulated or unregulated) the terms they are used to getting at pricing they find acceptable
  • Borrowers who already have loans that would be “non-pass” loans under the Guidance—they may find these loans difficult to refinance, restructure or materially amend in the future