Corporate mortgage loan (Switzerland)

A corporate mortgage loan is a Swiss bank financing secured by a mortgage (hypothèque) on a property owned by the borrowing company or its shareholders. It is one of the most common financing forms for Swiss SMEs, particularly for acquiring industrial or commercial premises. Its cost is generally lower than unsecured credit due to the real security provided. In financial due diligence, mortgages encumbering target assets are included in the financial debt definition and may limit the acquirer's ability to refinance or dispose of these assets post-acquisition.

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Example: a Swiss industrial SME owns a production building valued at CHF 4.8 million, subject to a CHF 2.5 million mortgage at a fixed rate of 1.9% over 10 years. In the acquisition of the company, this mortgage is treated as financial debt in the EV-to-equity value bridge, reducing the net price paid to selling shareholders by CHF 2.5 million — a material deduction that must be clearly defined in the SPA.

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Hectelion integrates corporate mortgage loans into the financial debt definition and analyses their impact on transaction structuring.