Stapled Financing
Investment Banking glossary · M&A & LBO Modeling Dynamics
Definition
Pre-arranged debt offered to buyers in M&A process.
Stapled Financing in plain English
Imagine you're selling your house, and to make it more attractive you line up a mortgage lender in advance so any buyer can instantly borrow the money to buy it. Stapled financing is that same idea in company sales: the bank advising the seller pre-arranges a loan package ("stapled" to the deal offer) that any bidder can use to fund the purchase. It speeds up the auction, gives buyers confidence the money is there, and sets a floor on financing terms. The catch is a conflict of interest — the seller's bank earns fees from both advising and lending, so it wants the deal done.
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