stapled papers

stapled papers
USA
stapled financing, Also known as stapled papers.
Business jargon for a pre-arranged financing package offered to potential bidders in an acquisition. Stapled financing is arranged by the investment bank that is advising the seller in an acquisition and includes a commitment letter (signed by the arranger but generally not the bidder) and a term sheet containing the principal terms of the financing. The commitment letter and term sheet are stapled to the back of the acquisition term sheet and submitted with the bid, hence the name "stapled papers" or "stapled financing".
Stapled financing was developed to expedite the bidding process; the buyer does not have to spend as much time seeking financing but can use the pre-arranged financing that is already available. Typically, stapled papers are not thoroughly negotiated unless the bidder wins the bid to acquire the target company. In practice, stapled financing was not used extensively and was not in favor with arrangers after the financial crisis, though practitioners report that stapled financing is re-emerging as of mid-2010.
Stapled financing has caused some concern regarding the ethics of an investment bank providing advice to the seller and lending to the buyer, and incurring fees for both services, in the same transaction.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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