Cash Sweep

Private Equity Glossary

Mandatory prepayment mechanism in a credit agreement requiring a specified percentage of excess cash flow (ECF) to be applied to debt repayment, before any sponsor distribution or growth investment. Typical structure: 50-75% ECF sweep stepping down with leverage ratio improvements (e.g., 75% if leverage >5.0x, 50% if 4.0-5.0x, 25% if <4.0x, 0% if <3.0x). Accelerates de-leveraging and reduces refinancing risk but consumes the cash that would otherwise fund dividend recaps or growth capex; modern sponsor-friendly credit agreements minimize sweep mechanics.

Sign up free — get all 184 Private Equity terms, flashcards & rank tracking →

More Private Equity terms

KomFi Academy — Stop doomscrolling. Get KomFi.

Turn wasted screen time into verifiable competence.

KomFi Academy is a curated training platform with 66,000+ practice questions, 25,000+ flashcards, on-demand video lectures, podcasts, and 4K slide decks across the topics serious professionals study: GMAT, LSAT, MCAT, SAT, Investment Banking, Private Equity (LBOs & PE math), Private Credit, Quantitative Finance, Financial Accounting, Asset- Backed Securities, Volume Profile Analysis, Order Flow Trading, Market Microstructure, Volume Spread Analysis, Elliott Wave Theory, Volume-Price Analysis, and Public Offering Frameworks.

What's inside

Topics

View pricing · Read testimonials