UnitrancheTechnology / SoftwareUS / Europe

$200M Unitranche for Software Acquisition

Cross-border unitranche facility supporting European sponsor acquisition of US-based enterprise software platform with SaaS revenue model and international customer base.

Deal Overview

Transaction TypeUnitranche Financing

Facility Size$200M

SectorEnterprise SaaS

Leverage5.0x ARR

Term6 years

StructureSingle-lien unitranche

JurisdictionsUS (Delaware) / Luxembourg

Closing DateQ4 2023

The Challenge

A European technology-focused private equity sponsor acquired a US-based enterprise software company with recurring SaaS revenue model, requiring acquisition financing structured to accommodate cross-border holding structure and technology-specific business metrics.

Key complexity factors included:

•Cross-border structure with Luxembourg topco and US operating company requiring coordinated security
•SaaS-specific covenant framework based on ARR growth rather than traditional EBITDA metrics
•Intellectual property security over software source code and customer contracts
•Accordion capacity for software M&A strategy with streamlined add-on mechanics

Our Solution

We structured a $200M single-lien unitranche facility with software-appropriate covenants and cross-border security architecture. The solution included:

Structure

→Single-lien unitranche with blended pricing eliminating senior/subordinated split complexity
→$50M accordion for M&A with same-terms availability upon compliance certificate
→SaaS-optimized covenants including ARR/Net Revenue Retention alongside traditional leverage
→Equity cure rights with 50% test period allowance during integration

Execution

→7-week timeline coordinating US (Delaware) and Luxembourg counsel for dual-jurisdiction structure
→US share pledge and Luxembourg holding company share pledge with guarantee structure
→IP security perfected under Delaware and federal law covering patents, trademarks, and copyrights
→Technology diligence focused on source code architecture and customer concentration analysis

Deal Structure

Capital Structure

Unitranche$200M

Accordion$50M

PricingL+550 blended

Sponsor Equity$130M

Covenants

•Net Leverage: 6.0x ARR (tested quarterly)
•ARR Growth: Minimum 15% year-over-year
•Net Revenue Retention: Minimum 95%
•Equity Cure: 50% of test periods (max 2 consecutive)

Key Documentation

Credit Agreement

US law-governed unitranche credit agreement with SaaS-specific covenant package, accordion mechanics for software M&A, and cross-border guarantee structure.

Security Documents

Delaware share pledge over US operating company, Luxembourg share pledge over topco, and comprehensive IP security over patents, trademarks, copyrights, and domain names.

Guarantees

Upstream guarantees from Luxembourg holdco and downstream guarantees from US subsidiaries creating cross-border security architecture supporting single-lien structure.

Escrow Agreement

Source code escrow with independent escrow agent, release conditions upon bankruptcy or material breach, and maintenance obligations for current version deposits.

Transaction Timeline

Week 1

Term Sheet & Kick-Off

Unitranche term sheet execution and initial management presentations covering SaaS metrics and technology stack

2-4

Weeks 2-4

Due Diligence & Documentation

Technology, financial, and legal due diligence with SaaS covenant modeling and credit agreement drafting

5-6

Weeks 5-6

Security Perfection

Cross-border security documentation, IP perfection filings, and source code escrow arrangements

Week 7

Closing & Funding

Simultaneous US and Luxembourg closings coordinated with acquisition completion and fund transfer

Outcome

The transaction closed successfully, enabling the sponsor to complete the software acquisition with appropriate financing structure for SaaS business model and cross-border operations.

Post-closing benefits:

•SaaS-appropriate metrics: Covenant framework aligned with software KPIs enabled management focus on ARR growth and retention rather than traditional EBITDA
•Accordion utilization: Company completed two software tuck-in acquisitions within 18 months using $35M of accordion capacity with streamlined documentation
•Operational simplicity: Single-lien unitranche structure eliminated intercreditor complexity and provided efficient decision-making during integration

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