Club Deal

A private equity company wants to take a company private in a deal that has a lot of risk to it, or might cost a lot of money. So, to reduce the firm’s risk, the fund manager calls other private equity managers he or she knows. Maybe from graduate school or membership at the local racket club. They then pool their money together to make the deal.

Sure, that deal could create problems, like conflicts of interest or market-cornering, but...who cares? How else are you going to load up a public company with debt, shed all its assets and make a few million dollars for a fourth house in Naples in the process?

To be clear, there are many definitions of this financial term. Law firm DLA Piper defines a Club Deal as “a Syndicated Facility which may be arranged on a less formal basis than a normal Syndicated Facility.”

This is an example of why you shouldn’t trust lawyers. Because our definition doesn’t require mental gymnastics and a thesaurus.