Pledge

A pledge (nantissement) is a security interest by which a debtor assigns movable intangible assets — company shares, trade receivables, intellectual property rights — to a creditor as collateral for a debt obligation. It grants the creditor a right of retention and realisation over the pledged asset in case of debtor default. In M&A and LBO financing, a pledge over the target's shares (or the NewCo's shares) is typically required by acquisition lenders as primary collateral — giving the bank the ability to take control of the company in case of debt service default.

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Example: in a Swiss LBO, the acquisition bank requires a pledge over 100% of the target's shares as primary security for a CHF 15.0 million senior loan. In case of loan default, the bank can enforce the pledge and take control of the target. During due diligence, any pre-existing pledges on the target's shares must be identified and released before closing — typically financed from a portion of the acquisition proceeds.

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Hectelion identifies existing pledges on target shares in every acquisition due diligence and manages their release as part of the closing mechanics.