SD-04.4 — Deal Structuring & Negotiation

Business Domain: BD-04 Direct & Co-Investment (Front office) · Applies: PRIV

Purpose

Designs the legal, tax, capital and covenant structure of a direct transaction and negotiates its terms. Structuring is where the diligence findings become a deal: how the asset is owned, how it is financed, how the parties’ incentives are aligned, and on what terms. Like diligence, it is one capability whose operations branch by mode — an LBO capital structure, a concession or regulated-asset structure, and a credit covenant package are different structuring problems.

Service Operations

Design the capital structure — for a buyout, the debt and equity mix, the senior and mezzanine tranching, and the equity cheque.
Structure management equity — rollover equity, the management incentive pool, ratchets, vesting and leaver provisions.
Design real-asset and project structures — concession, public-private-partnership and build-operate-transfer structures, regulated-asset-base models, project-finance special-purpose vehicles and joint ventures; and, for natural resources, operating-lease, crop-share and specialist-operator (TIMO / farmland-operator) mandate structures.
Structure the credit — for a direct loan, covenant design, the security and collateral package, and loan tranching (first-lien, second-lien, unitranche).
Design the tax and acquisition-vehicle structure — the holding-vehicle structure and jurisdiction.
Negotiate the term sheet — price, structure, governance and covenants; and, where applicable, form the club or consortium and negotiate the co-bidder agreement.

Inputs and outputs

Inputs: the diligence pack and model (SD-04.3); investment-committee guidance; lender appetite.
Outputs: the capital or financing structure, the management-equity plan, the acquisition vehicle, and the negotiated term sheet — consumed by SD-04.5 Investment Approval & Authorisation and SD-04.6 Deal Execution & Legal Closing.

Entities

Consumes: Legal Entity (E-01), Instrument / Asset (E-02), Direct Real Asset (RA-01); the SD-04.3 diligence pack and model.
Owns: none — the structure and term sheet are analytical and contractual artefacts.

Standards

The LBO capital-structure conventions; concession / public-private-partnership and regulated-asset-base structures; credit-agreement covenant and security conventions. No single standard spans the modes — the SD’s operation set is the union.

Open extensions

The interaction with SD-04.6 — structuring designs the deal; SD-04.6 executes the documents that enact it.