Term of the Day
Staple Financing means a financing package that is pre-arranged by investment banks and offered to potential bidders in an acquisition. The name indicates that the financing details are stapled to the back of the acquisition term sheet.
The package includes the details of the financing such as principal, fees and loan covenants. This expedites the bidding process, as lending is pre-arranged, the buyers do not have to deal with financing and the seller receives more timely bids. The investment bank usually charges fees to both sides of the merger, as it provides advice to the seller and financing to the buyer.