Equity commitment letters and the applicability of the concept of "certain funds" in private acquisitions by private equity funds | Practical Law
Equity commitment letters have become standard deliverables in private acquisitions by private equity (PE) funds. This article explores the reasons for equity commitment letters being required in PE acquisitions and identifies the special features of PE acquisitions that may cause parties to seek or accept certain equity commitment protections. It also touches on the traditional "certain funds" requirement applicable to certain public acquisitions under Rule 2.7(d) of the City Code on Takeovers and Mergers, including the parallels between these requirements and the protections provided in an equity commitment letter.