Acquisition Finance 2025 Comparisons

The Swedish leveraged finance market features a mix of local banks, international banks, direct lenders, and debt funds, but the balance varies depending on the transaction.

• Local banks: the major Nordic banks, such as Nordea, SEB, Swedbank, Danske Bank and DNB, dominate traditional leveraged lending. They are particularly present in the small and middle-market leveraged buyouts (LBOs) where relationships are crucial.
• International banks: large global players, like Deutsche Bank, Morgan Stanley, Goldman Sachs, are more involved in larger or cross-border transactions and high-profile LBOs.
• Direct lenders and debt funds: these have grown significantly in the past decade, especially for deals that fall below the radar of larger syndicated loan markets or banks. Funds like Ares, Blackstone and Bridgepoint play an increasing role in providing unitranche solutions, offering greater flexibility for borrowers.

In summary, in the Swedish market all lender types are active, and local banks enjoy a particularly entrenched position in smaller transactions. In recent years, the debt funds have significantly increased their market share.

Swedish corporates and the LBO market are marked by steady activity supported by a robust private equity presence.

• Corporates: large Swedish industrials (eg, ABB, Essity, Volvo) and tech companies often rely on traditional bank funding and occasionally accessing the bond market.
• LBOs: Sweden serves as a significant hub for private equity, with several global PE firms and Nordic-based firms (eg, EQT, Nordic Capital, Triton and Altor) active in the market. LBO financing typically combines senior loans (often syndicated), super senior revolving credit facilities, and, in larger deals, high-yield bonds or mezzanine tranches. Recent years have seen a rise in unitranche facilities as a more streamlined alternative.
• The market has been resilient, though it can be sensitive to fluctuations in interest rates and lending conditions. AT the beginning of 2025, the tariff war sparked high volatility on the market; the M&A market became quieter while analysing the effects and the debt capital market froze for a while. Still, many corporates have surplus cash and PE funds have large investor commitments to deploy, so when the market stabilises and sellers are willing to put assets on sale, M&A activity is expected to rise quickly.

The governing law for corporate loans, acquisition finance and LBOs in Sweden can differ based on the transaction’s parties and location.

• Corporate loans: Swedish law is commonly used for straightforward domestic corporate loans, reflecting the local nature of the relationship between borrowers and lenders. In some larger financings where the lender group includes a large number of international banks, English law is dominant.
• Acquisition finance/LBOs: historically, mid-size deals and above adopted English law as their governing law. Today, many mid-size deals are done under Swedish law while all larger transactions are governed by English law. More of the mid-size deals are governed by English law when international players are involved, larger PE sponsors often have a London-based relationship with international banks and credit funds and run their negotiations through London-based borrower teams. The trend over the years is that both international banks and credit funds are more comfortable with Swedish law as the governing law of the documentation, despite a larger variety of court precedents under English law that give a more detailed guidance to the interpretation of certain concepts and situations.

Ultimately, governing law choices depend on the preferred location of the PE sponsor, the lenders involved, the financing structure, and market practice.

LMA templates are the dominant choice in Swedish leveraged finance, as they offer consistency and clarity for international and local transactions.

• LMA agreements: typically employed for senior facilities and revolving credit facilities, especially in LBOs or acquisition finance transactions involving PE sponsors or multiple lenders. These may be governed by English or Swedish law.
• Other agreements: Swedish law-governed loan agreements are sometimes used for smaller corporate loans or smaller domestic acquisitions. In these cases, the documentation may be simplified.
• Nordic-style LMA: as a mix between the two previously-mentioned agreements, there is a type of documentation which is referred to by local PE sponsors and banks as a Nordic-style LMA-based document. In practice, this is a shorter version of the leveraged LMA template.

Loan agreements for cross-border transactions governed by LMA standards are typically drafted in English. In a very limited number of cases, documents may be prepared in Swedish, but all major stakeholders are proficient in English, and English is accepted market wide.

Legal opinions are critical in Swedish acquisition finance transactions to confirm enforceability, capacity, and regulatory compliance.

• Capacity and authority opinions: in larger English law-governed transactions, these are issued by the borrower-side counsel to confirm that local borrower companies have the authority to enter into financing agreements. In smaller transactions, the lender counsel also covers this in the enforceability opinion.
• Enforceability opinions: these state that the financing agreement is legally binding under Swedish law or the governing law chosen by the parties.
• Other opinions: there are a number of other issues that may be covered and Sweden does not stand out in terms of having any particularly unusual opinions.
• Recent issues: in recent years a practice of capping the liability under legal opinions has become increasingly established by local firms. As many international lenders do not accept this, it has been an issue in several transactions, particularly when raised late in the transaction and thus causing issues. Therefore, in the future, lenders may need to turn to the international firms present in Sweden which have not applied this practice this far.

Senior loans are the backbone of Swedish leveraged finance structures, commonly used for acquisition financing and LBOs.

• Typical structure: senior loans often consist of term loans and a revolving credit facility.
• Syndication: for high-value or cross-border deals, senior loans are typically syndicated among banks and financial institutions to spread any risk. For domestic mid-market deals, bilateral loans or club loans (just a few banks) with Nordic banks are popular.
• Priority: these loans are secured and rank highest in the capital structure, benefiting from first-ranking security over borrower and guarantor assets.

Mezzanine loans and PIK loans are generally used to fill funding gaps or increase leverage in Swedish LBOs, though these structures have become less common in recent years due to the rise of unitranche lending.

Mezzanine Loans

• Mezzanine loans are subordinated to senior loans but rank ahead of equity.
• They are often provided by specialists or private debt funds.
• Typically, they are secured by the same security as the senior debt, but rank lower in the waterfall and come with a higher interest rate to reflect increased risk.

PIK Loans

• A mechanism where interest payments are capitalised (rather than being made in cash) to reduce immediate cash-flow constraints on borrowers.
• PIK loans are only used in large, complex multi-layered funding structures.
• One type of PIK loan, which may fall within the scope of fund finance (financing PE funds), is the equity loan, which is provided at a level above the LBO financing and which does not rely on the same security, but instead is covered by guarantees from the PE funds. Only in a very few situations have PIK loans in Swedish law structures lacked guarantor cover from the PE fund. These types of loans are typically used to increase leverage, but can also be used to finance recapitalisations, where the PE fund retracts equity without selling the asset and thus increasing IRR.

Bridge loans are short-term facilities designed to provide interim funding until longer-term financing is arranged, primarily for corporates.

• Structure: bridge loans are often unsecured but rely on borrower guarantees and undertakings.
• Use in Sweden: common in acquisition finance, particularly in auctions, where immediate liquidity is required to close a deal before the permanent capital structure (eg, bonds, term loans or rights issues) is finalised.
• Repayment: typically repaid through the issuance of bonds, proceeds from long-term loans, or other refinancing mechanisms.

High-yield bonds are increasingly popular in the Swedish market, often used by PE sponsors, either in connection with the acquisition or in a refinancing. While bridge to bond facilities may be provided in larger transactions, the arrangement of underwritten high yield bonds is possible under Swedish law.

• Structure:
1. usually unsecured for corporates while high-yield bonds will usually be secured (although lightly secured compared to senior loans) unless security is granted only for the super senior revolving facility; and
2. rank below super senior debt in the repayment waterfall but above equity.
• Issuers: high-yield bonds are typically issued through SPVs to streamline regulatory and tax considerations.
• Typical users: frequently used for larger corporates or LBOs requiring significant funds beyond what traditional banking syndicates can provide.
• Governing haw: many high yield bonds in the small and mid-size segment are governed by Swedish law. In larger international transactions English and New York law is dominant.

Private placements and loan notes provide an alternative to public bonds for smaller or more bespoke transactions.

• Structure: loan notes are typically unsecured and documented via simplified agreements.
• Use in Sweden: primarily utilised by smaller corporates or investors for funding requirements that do not suit bank loans or public instruments like bonds. Private placements offer flexibility and customised terms but lack the liquidity of public debt instruments.

Asset-based financing (ABF) is less prevalent in Sweden than in the USA or the UK but is occasionally used for borrowers with significant physical assets.

Typical Structure

• Facilities are secured against specific assets, such as inventory, accounts receivable or equipment.
• Loan values are directly linked to asset valuations (eg, through borrowing base calculations).

Common Uses

• ABF is more common in sectors like manufacturing and logistics, where movable assets (eg, trucks or warehouses) or receivables can act as collateral.

Intercreditor agreements govern the relationship between different lenders in a financing structure and are particularly crucial in LBOs and acquisition finance. In Sweden, they often follow LMA standards. Typical elements include the following.

• Ranking and priority: clearly define the order of payment between senior, mezzanine and any subordinated lenders or unitranches and super senior RCFs. Lenders typically share first-ranking security and the payment waterfall provides for ranking between the creditors.
• Standstill provisions: prevent junior lenders from enforcing security or suing the borrower during agreed standstill periods, usually to allow senior lenders to recover their debts first.
• Payment waterfall: dictates how proceeds (from enforcement or other sources) are distributed among creditors. Senior debt is paid first, followed by mezzanine and junior debt. For unitranche transactions, the super senior debt will be paid first.
• Turnover provisions: require junior creditors to turn over any recoveries received in breach of the agreement to senior lenders.
• Release of security: gives senior lenders control over security releases in enforcement scenarios to prevent conflicts among creditors.

In bond deals the structuring may be dependent on whether there is a bond ranking pari passu with the RCF and whether it is English- or New York-governed documentation. In Swedish high yield bond transactions, the most common structure includes a senior bond with a super senior RCF and super-senior ranking hedging.

• Structural subordination: high-yield bonds may include a structurally subordinated bond if issued through a holding company above the operating company’s level. In such cases, bondholders may rely more on their position in the capital structure than specific intercreditor rights.
• Pari passu in payment but subordinated at enforcement: some structures may place bonds pari passu with senior loans or permit payments, but restrict bondholders’ ability to trigger enforcement. Once enforcement is triggered, the bondholders may control enforcement under certain conditions.

High-yield documentation for larger transactions often adheres to New York or English law standards.

Hedge counterparties, often participating in the form of interest rate or currency hedging, play a peripheral but protected role in intercreditor agreements.

• Priority positioning: hedge liabilities under documented ISDA Master Agreements generally rank alongside senior lenders (or super-senior RCFs in bond and unitranche structures) in the payment waterfall. This protects hedge counterparties’ positions, particularly in an enforcement scenario.
• Pricing stability: derivatives help manage interest rate or currency risk for the borrower, stabilising cash flows and improving the transaction’s overall risk profile.
• Voting rights: hedge counterparties typically have limited (or no) voting rights in lender decisions outside payment and securities enforcement issues.

Swedish acquisition finance transactions typically involve a wide range of security to protect lenders. Common types of security include the following.

Shares

Security over shares in the target or Swedish subsidiaries is common.

Shares represent a critical asset to control the borrower group in enforcement scenarios, where the lenders focus on the single point of enforcement, where the whole borrower group may be taken control over or be sold.

Inventory

Inventory is sometimes used as collateral, primarily in asset-based financings. Security is normally granted in the form of a floating charge (business mortgage) (which may incur stamp duties).

Bank Accounts

Security over bank accounts located in Sweden is usually not granted in more local LBO structures. The main reason is that such security requires that the pledgor is restricted from making withdrawals, so it normally remains unperfected until a later trigger (such as an event of default). The delayed perfection may trigger a three-month hardening period and is of less value for lenders, hence local PE sponsors have often succeeded in avoiding bank account security using the cost/benefit argument. Bank account security will be more frequent in larger English law deals with foreign credit funds. Asset finance, including real estate finance, will usually include bank account security.

Receivables

Borrower entities may grant security over intra-group loans and, in some more specific situations, trade receivables. Notification and payments to the pledgee are typically required. Trade receivables may therefore be more commonly covered by a floating charge (business mortgage).

Intellectual Property Rights (IPR)

Patents, trade marks and copyrights are occasionally pledged. IPR security is less common unless the borrower operates in IP-reliant industries.

Real Property

Mortgages are used to provide security over land or buildings owned by Swedish companies. Mortgages may incur stamp duties.

Movable Assets (Trucks, Trains, Etc)

Specific movable assets, such as vehicles or equipment, can be secured via pledges, but due to the perfection requirements security is typically granted under a floating charge (business mortgage). There is also a security transfer option, which may be used for larger scale security arrangements in order to avoid stamp duty and where there is no need for flexibility, such as project finance structures.

Security interests must typically adhere to formal perfection requirements under Swedish law.

• Share pledges: delivery of share certificates (if applicable) (or registration for registered shares), entry in the share register and notification to the company.
• Receivables and intra-group loans: notification requirements and payment to the pledgee.
• Bank accounts: notification requirements (and no withdrawals).
• Real property and business mortgages: delivery of mortgage certificates (or registration if digital certificates).
• IPR: registration, except for copyright where there is no registration available.
• Security transfer: announcement and registration requirements.

Parties should ensure compliance with these formalities to perfect the security interest and maintain enforceability.

Some security interests, particularly those over land, require registration.

• Real property: to grant real property mortgages, mortgage certificates must be issued by and registered with the Land Registry (Lantmäteriet). A stamp duty of 2% on the face value of such mortgage certificates will be payable. Already issued mortgage certificates can be pledged without incurring additional stamp duty.
• Floating charges: to grant a floating charge (business mortgage), mortgage certificates must be issued by and registered with the Swedish Companies Registration Office (Bolagsverket). A stamp duty of 1% on the face value of such mortgage certificates will be payable. Already issued mortgage certificates can be pledged without incurring additional stamp duty.
• Trade marks and patents: security over trade marks and patents are perfected by registering the pledge agreement.
• Security transfer: security transfer, which uses an old law providing for the transfer of movable assets while they remain in the possession of the seller (but still providing for protection against the seller’s creditors and insolvency), is perfected by notification in a newspaper and registration of the pledge agreement with the Swedish Enforcement Agency (Kronofogdemyndigheten).

Apart from registered security, the main principle for obtaining perfected security is for security assets to remain in the possession or control (the right to dispose of the asset or receive payments under it) of the pledgee throughout the security period.

A number of restrictions apply to provision of security and guarantees, primarily if it covers loans to the pledgor’s parent or fellow subsidiaries. The restrictions in this and the following sections apply in parallel and it is important to analyse the structure and series of transactions as Swedish courts will take a view from a substance over form perspective.

• Corporate benefit: the general upstream restriction from value transfer provisions will not apply to the extent there is corporate benefit for the company to provide the Support. The corporate benefit concept under Swedish law is a relatively narrow concept and will require clear benefit from the Support for the company. To the extent there is no or limited corporate benefit, the upstream value of the Support will be dependent on the following restriction from value transfers.
• Value transfer: in addition to the value of corporate benefit, upstream Support will be limited to the company’s distributable reserves (as approved at the last annual shareholders meeting), subject to maintaining a certain buffer. As value transfers require shareholder approval (but which may take a more informal form), approval of upstream Support is normally included in the direct parent entity’s board resolutions.

Additional exceptions may be structured through by adopting more advance corporate group structures, debt push-down and mergers. Different workarounds are available for this and the restrictions in the following sections.

Consequence of Support granted in violation of the aforementioned restrictions may include invalidity and personal liability.

A Swedish company may not provide Support for the debt financing the acquisition of itself or another Swedish parent company. It is established that this prohibition cannot be circumvented by so-called minute loans. Instead, it is key that the lender stands a real credit risk before obtaining Support from the acquired company. There is no formal timeline, but the leading firms have established a market practice where the borrower undertakes to procure that the target group provides Support after 90 days. That means that this restriction will not apply to Support provided thereafter.

Consequences of Support granted in violation of the financial assistance regulation may include invalidity, personal liability and criminal sanctions.

In addition to the value transfer provisions and the financial assistance restriction, the following provisions may limit the upstream value of guarantees and security from Swedish companies.

• General loan prohibition: generally, a Swedish company is prohibited from providing upstream Support, except for certain specified exceptions. The most frequent exception is when Support is provided for the obligations of a company within the same group where the parent company is domiciled within the EEA. This means, for example, that Support can normally not be provided for the obligations of a direct parent company located in the UK or the USA, unless there is an ultimate parent company domiciled within the EEA.
• Minority shareholder protection: another restriction is provided for under the principles of equal treatment of shareholders, which provides for restrictions on Support for a majority shareholder as such Support may discriminate minority shareholders financially.
• Ultra vires: the provision of security and guarantees beyond what is permitted under the company’s articles of association may be invalid.
• Insolvency: in insolvency situations, the granting of Support may be restricted under criminal law if it provides for a preferential position for a creditor over others.

Consequence of Support granted in violation of the restrictions above may include invalidity, personal liability and, for the loan prohibition, criminal sanctions.

Enforcement proceedings for security interests in Sweden follow established legal principles.

• Out-of-court enforcement: share pledges or other security involving possession can often be enforced outside court through private sale or auctions.
• Formal forms of enforcement: enforcement of real property and business mortgages typically require involvement of the Swedish Enforcement Agency (Kronofogdemyndigheten) or court.
• Duty of care: a pledgee owes a general duty of care, which at the time of enforcement entails an effort to realise the security assets at a reasonable market price. Any value of the security assets in excess of the secured liabilities needs to be repaid to the pledgor. Therefore, a valuation of the assets will be key in case the pledgee takes possession of the security assets at enforcement.

In Swedish acquisition finance transactions, guarantees play a crucial role in securing lender recovery. The different types include the following.

• On demand guarantees: the strongest version of guarantees and may be separate from the guaranteed obligations.
• As for its own debt: guarantee granted as for its own debt (proprieborgen) is directly tied to the guaranteed obligations. The beneficiary may pursue the guarantor directly before directing a claim towards the debt.
• Simple guarantee: the basic guarantee under Swedish law is the simple guarantee (enkel borgen) where the beneficiary first needs to direct a claim towards the debtor before turning to the beneficiary.

The same restrictions as for security, referred to at 6.1 Types of Guarantees, apply to guarantees.

There is typically no general requirement under Swedish law to charge guarantee fees for providing a guarantee. However, a guarantor may require fees on a commercial basis, as evidence of the commercial benefit the guarantee provides when challenged on corporate benefit grounds.

Swedish law does not formally recognise the concept of “equitable subordination” as it exists in other jurisdictions.

Under Swedish insolvency law, transactions made by a company can be challenged and potentially clawed back to the estate following insolvency, particularly if they are deemed to unfairly benefit one creditor over others and in some other situations. Key situations include the following.

• Improper preferential treatment: a transaction involving a preferential treatment of a creditor ahead of other creditors can be subject to claw-back during a period of up to five years if the transaction alone or together with other actions caused insolvency.
• Payment of debt prior to bankruptcy: payment of debt within three months prior to bankruptcy and which has been made either (i) prior to its ordinary maturity date, (ii) with unconventional means of payment or (iii) in an amount that has materially worsened the financial position of the debtor, can be subject to claw-back unless such payment is deemed to be ordinary.
• Security provided after debt incurrence: security granted or perfected after the debt has been incurred may be subject to a three-month hardening period. For LBOs, where it is common that certain security is provided 90 days after closing, it will mean that such security will become effective after six months from closing.

Longer claw-back periods may apply for transactions involving related parties (such as owners, directors and group companies).

Lenders should take a cautious approach in refinancing or restructuring scenarios, particularly if the borrower is in a distressed financial position.

Sweden does not impose stamp duty or similar transaction taxes on loans or security. However, there may be fees associated with certain registrations.

• Real property mortgages: mortgages require registration with the Swedish Land Registry (Lantmäteriet) and this attracts a stamp duty of 2% of the secured amount at the time of issuance.
• Business mortgages (floating charges): registration of business mortgages with the Swedish Companies Registration Office (Bolagsverket) incurs a stamp duty of 1% on the face value of the mortgages at the time of issuance.

Sweden does not impose withholding tax on interest payments made on loans. However, certain limitations apply if the interest payments are treated as other forms of income (eg, reclassified under tax treaties or local anti-avoidance rules).

Unlike some jurisdictions, Sweden does not use a formal “qualifying lender” concept for withholding tax exemptions.

Sweden does not apply traditional thin-capitalisation rules (eg, fixed debt-to-equity ratios). Instead, it uses interest deduction limitation rules to prevent aggressive tax structuring.

• General limits: interest is deductible only if the loan relationship meets ordinary arm’s length principles.
• Earnings-related limit: deductions are capped at 30% of tax-adjusted EBITDA. This rule applies uniformly to domestic and international transactions.
• Anti-avoidance rules: interest paid to affiliated entities in low-tax jurisdictions may be disallowed unless the borrower can demonstrate adequate commercial justification.

Lenders and borrowers should carefully structure deals to ensure compliance with these restrictions, as non-deductible interest can increase the effective cost of debt.

When financing the acquisition of regulated targets in Sweden (e.g., financial institutions or companies in sensitive industries), specific rules apply.

• Regulated businesses: acquisitions of entities operating in regulated sectors like banking and insurance require pre-approval from relevant authorities.
• FDI: since December 2023, there is a new law on foreign direct investments applicable in Sweden. The new law is one of the most comprehensive laws in Europe, which means that many target companies may fall within the scope of this law and need to be approved by the authorities.

Banks involved in these transactions must ensure that the financing complies with local regulatory requirements, particularly if the transaction adds layers of cross-border complexity.

For listed company acquisitions, additional considerations arise under the Swedish Takeover Act and the rules of Nasdaq Stockholm (or other regulated markets).

• Certain funds requirement: Bidders must ensure financing is in place on a certain funds basis at the time of launching a public offer.
• Disclosure requirements: bidders must disclose key aspects of the financing arrangement in the offer document and list all conditions for disbursement of loans.
• Other procedural rules: the rules governing public offers set strict timelines and notification periods, ensuring transparency and fairness for target shareholders.

In takeover finance, Swedish law aligns closely with EU requirements, but transactions often require bespoke structuring to manage regulatory, shareholder and financing constraints.

Swedish acquisition finance practice aligns with broader European standards, but there are some unique features to be aware of, as set out below.

Efficient Enforcement Framework

• Enforcement of security in Sweden is considered predictable and efficient compared to many jurisdictions.
• Share pledges, bank account pledges, and certain other security can often be enforced out of court, which saves time and costs. However, judicial procedures are still required for some assets, such as real property.

Sustainability Features

• Sweden has a strong focus on ESG initiatives, reflective of broader Nordic market trends. Acquisition finance transactions may include sustainability-linked loans, where pricing is tied to the borrower’s achievement of specific ESG targets.
• This trend is particularly prominent in financing portfolio companies in ESG-sensitive sectors or where private equity sponsors are targeting green certifications or benchmarks.