A recent article in CFO Magazine highlights the recent uptick in unitranche loans, pointing out their simplified structure when compared to traditional senior or mezzanine debt options. While the number of unitranche loans is still small compared to other loans, the article notes that their use has risen significantly in the last two years.
Typically used for refinancing, recapitalization and other situations where minimal complexity is ideal, unitranche financing can be a faster way to borrow. Utilizing a single lender instead of gathering several lenders, a unitranche facility can potentially save the headaches of micro-management and offers less risk of the deal collapsing. Additionally, unitranche borrowers often pay less interest than they would when using other, more traditional financing options.
Unitranche loans were first created in 2005 and are returning to popularity, in part because of their high success rate. Particularly in today’s difficult M&A market, unitranche loans offer a great solution for companies looking toward a buyout.
To read the full article in CFO Magazine, click here.