CIMA F3 Syllabus D. Business valuation - Treatment of target entity debt - Notes 5 / 11
Managing the re-financing of the target's debt
Many debt agreements carry a change of control clause which means that when a company completes an acquisition it may well have to refinance the target company's debt.
The acquiring company will need to ensure that it has factored this into its financial planning.
This may require a short-term line of credit to act as a bridging loan while re-financing is being arranged.