During the robust M&A market of the mid 2000s, prearranged financing terms were commonly included in (or “stapled” to) offering memoranda by sellers seeking bids in auction sales. The investment bank advising the seller would offer to provide debt financing on preset terms to all qualified bidders, usually giving the winning bidder the option, but not the obligation, to accept such financing. Such stapled financing provided several benefits to the seller, including increasing the number of bidders, creating a more robust auction, reducing the time necessary to sign a transaction agreement and possibly providing greater certainty of closing the sale. With the onset of the credit crunch in 2008, however, the willingness of lenders to provide stapled financing greatly diminished.
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