Techniques de financement d'acquisition d'entreprises par les fonds de private equity et assistance financière

We examined the acquisition of private companies by Private Equity Funds in Belgium. In particular, we focused on Leveraged Buyouts which strive to increase investment performance with large borrowings. In Belgium, there are restrictive financial assistance regulations limiting the assistance a target company can give to an acquirer. For this reason, a series of bypassing techniques have been developed over the years. One popular technique is the pledging of acquired shares by the Fund. This financial transaction takes place outside the scope of the law and is accepted by the jurisprudence. The pledging of shares is often followed by a debt pushdown operation coupled to a distribution of dividends. The leveraging effect takes its full force when dividends payments are tax-exempt and when interest payments can be deducted. This is possible but conditions have to be met and limitations exist. In a final section, we compare this system of financial assistance to other countries and conclude that the Belgian regulations can be viewed as unnecessary, at times incoherent, overly protective, and as a result counterproductive.