Debt covenants in Germany (especially with kfw financing)

by a searcher from WHU-Otto Beisheim School of Management

5 months ago

Hi all,

would be keen to learn about what debt covenants (e.g., debt service coverage ratios) banks want to see when they finance transactions in Germany. I'd be especially interested to hear about reference values for financings supported by the KFW. 

Thanks a ton

Christian

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searcher from Maastricht University - School of Business and Economics

Not sure about KFW, but in my experience it heavily depends on deal size and hence on the sophistication of your banking partner (Leveraged finance banker vs. Corporate banker). However most often I have seen some sort of Net Debt to EBITDA metric, where banks are willing to lend 3x-3,5x (excl or discounting vendor loan, earn-outs to some extend)

5 months ago | like reply | 0 likes

searcher from Universität Mannheim

We had a deal where the interest payment would have been around 1/4 of EBITDA with amortization being roughly another 1/4 of EBITDA. We were offered a line of credit around as big as what our interest payment would have been for extra liquidity.
We were going to use the KfW 366 program as well as a Bürgschaftsbank so the risk for the bank was actually quite low.
The seller backed off though so we are still searching.

5 months ago | like reply | 0 likes

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