M&A Deal Essentials: Your Banks Are Part of the Deal Too: Waivers

From the outside, a share deal often looks like a transaction between shareholders. The sellers agree to sell. The buyer agrees to buy. The parties negotiate the purchase price, sign the SPA, and work towards closing.

In reality, however, there is often another group sitting quietly in the background with significant influence over whether the deal closes on time: the banks. For many clients, this comes as a surprise. After all, the lenders are not buying or selling the business. They are not negotiating the commercial terms of the transaction. Yet in many deals, the financing workstream becomes one of the most time-sensitive parts of the entire process.

Debt Repayment and Bank Releases Before Closing

When a buyer acquires a company, it typically expects to take over a business with a clear understanding of its debt position. That sounds straightforward.

In practice, existing financing arrangements often need to be reviewed, repaid, amended, released, or formally waived before closing can occur. In the underlying transaction documentation, we worked with in the past, this required notification of financing banks, negotiations regarding loan termination, repayment mechanics, release agreements, debt repayment notices, and, where full releases could not be achieved, change-of-control waivers.

None of these steps happen automatically.

Typical issues include:

• confirming outstanding repayment amounts;
• agreeing how and when loans will be repaid;
• arranging the release of security interests;
• obtaining confirmations that financing arrangements will not be terminated because ownership changes; and
• coordinating payment mechanics that must work on closing day.

In our experience, this is an underestimated part of the transaction process. The legal documents may be largely agreed, but closing can still depend on several third-party institutions providing the confirmations and documentation needed to complete the process.

Bank Approval Timelines in M&A Transactions

One of the realities of M&A is that not everyone involved is equally motivated to get the deal done. The buyer wants certainty. The seller wants completion. Advisers are focused on keeping the process moving. Banks, however, have their own priorities.

From their perspective, the transaction is typically just one matter among many. Internal approvals may be required. Credit, compliance, security, and documentation teams may all become involved. Response times can be difficult to predict.

This is why transaction timelines are often influenced by lender responsiveness as much as by negotiations between buyer and seller. A deal may be ready to close commercially, but still be waiting for a release letter, a payoff confirmation, or a waiver from a financing institution.

Security Releases: Why Debt Repayment is Not Enough

Clients often assume that repaying the debt solves the problem. But repayment and release are not necessarily the same thing.

The practical objective is usually not only to settle outstanding amounts but also to ensure that any related security package is released properly. Depending on the financing structure, this can involve:

• a series of additional documents
• confirmations,
• and post-closing formalities

The challenge is that many of these steps are interdependent. The lender may require repayment before releasing security. The buyer may require confirmation of release before funding repayment. The closing structure needs to accommodate both expectations simultaneously. That is where careful coordination becomes essential.

Accounting for the unforeseen (Alternativlösung einplanen)

Not every negotiation with a lender ends exactly as expected. Experienced transaction teams therefore prepare for alternative outcomes.

Sometimes a release agreement cannot be obtained in time. In those situations, parties may need a different solution, such as a waiver confirming that the financing can continue despite the change of ownership. The transaction documentation we periodically encounter in our practice contemplate precisely this scenario, recognising that certain loans might require a change-of-control waiver rather than a full release.

From a client perspective, this may seem like contingency planning. In practice, it is often what keeps a closing timetable intact.

Financing Conditions: Why Bank Documentation Affects Closing

The closer a transaction gets to closing, the more important financing mechanics become:

• Debt repayment figures must be finalised.
• Payment instructions must be verified.
• Release documentation must be available.

The parties need confidence that all required lender actions will happen at exactly the right moment.

In many deals, these items are built directly into the closing sequence itself. Debt repayment, loan releases, and related lender documentation become part of the coordinated package that allows ownership to transfer and funds to change hands. This is why financing matters are rarely just administrative tasks. They are often fundamental closing requirements.

Early Bank Engagement: Reducing Closing Delays

One common lesson across transactions is that lender-related work is easier when it starts early. The sooner financing providers are informed, documentation is identified, and discussions begin, the more flexibility the parties usually have. By contrast, delays often occur when financing issues are treated as something that can be addressed shortly before closing. Unfortunately, banks rarely share that view.

For businesses, the key takeaway is straightforward: Your bank may not be signing the SPA. But in many transactions, it is still part of the deal. And the timetable often reflects that reality.