The Advantage of a One-stop vs Two-stop Financing Deal

A one-stop financing deal refers to a structure where all the layers of debt are sourced from one lender. A two-stop financing deal refers to a structure where the layers of debt are sourced from two lenders. The standard acquisition financing or leveraged buy-out structure contains both a senior debt and a subordinated debt layer.

Senior debt is low cost, short term and is usually provided by a bank, based upon collateral values. Subordinated debt is long term, flexible and is usually provided by a mezzanine fund based upon a multiple of EBITDA. When both senior and subordinated debt are combined into the same structure, this is called a one-stop structure. One stop structures can also be called unitranche structures.

The main benefits of using a One-stop acquisition financing are speed, ease of closing and larger loan amount. If you are funding an acquisition, it is highly beneficial to explore how a one-stop financing can work for you.
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