The Risk Agent

Deal Risk

How do I assess and mitigate financing risk (commitments, covenants, MAC clauses) in a transaction?

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Financing risk is the danger that the money funding a deal is not there when completion arrives, or comes with strings that constrain the business afterwards: commitment letters with unmet conditions, covenants that bite under stress, and material-adverse-change clauses that let lenders walk.

Boards care because a financing failure between signing and closing can collapse the transaction and expose the buyer to liability. This research note sets out how financing risk presents in your chosen jurisdiction and industry, and a framework for testing commitment certainty and covenant headroom.

It covers scenarios in which funding falls away, the warning indicators of fragile financing, realistic impact ranges, and mitigation. It also sets out when to engage deal counsel, financing advisers and lenders' counsel.

It is research to inform your own advisers, not legal or financial advice.

Reference material for informed readers, not advice.

What's included

  • What this risk looks like in practice
  • Legal and regulatory framework in your country
  • Industry-specific risk profile for your industry
  • Real-world scenarios
  • Early warning indicators
  • Impact analysis
  • Comparative risk context
  • Mitigation and control strategies
  • When you need an expert

Risk question

How do I assess and mitigate financing risk (commitments, covenants, MAC clauses) in a transaction

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Research, not advice. Consult a qualified professional before acting on anything in this report.

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