A pre-arranged loan package the buyer never used

The situation

Halina had done this once before. Years earlier she had sold a small chain of retail bakeries she started as a working baker, standing at a mixer at five in the morning long before she owned anything, and used the proceeds to buy into a wholesale bakery-supply distributor serving restaurants and grocery chains across eastern Ontario. Under her management the distributor had grown steadily for close to a decade, adding routes, adding suppliers, and slowly becoming something worth more than the sum of its trucks and warehouse leases. By the time she decided to sell it too, it was doing well enough to attract several serious buyers, and Halina wanted this sale to go more smoothly than the first one had.

Her financial advisor suggested something that had worked for larger companies she had read about: arrange the buyer's financing herself, ahead of the sale, and staple it to the deal. A lender would commit in advance to a debt package sized to the purchase price, on terms Halina's team had already negotiated, so that whichever bidder won would not have to start a financing process from scratch. Bidders could use the package or not, but having it in place was meant to speed the process and remove the single most common reason a deal drags on or falls apart in the final weeks: a buyer whose lender is still doing diligence long after the price has been agreed.

The plan looked sound on paper. Halina's team lined up a regional lender, agreed rates and covenants that were reasonable for a company of this size, and built the stapled package into the offering materials that went out to prospective buyers. Three parties bid within a few weeks of each other. Two indicated they would likely use the stapled financing, and their offers came in close to what Halina's advisors had expected. The strongest bid, higher than either of the others, came from a buyer represented by Agus, and it arrived with a note attached: they had their own lender, on terms they preferred, and did not want the staple.

That single line changed the shape of the transaction more than Halina initially understood. The purchase agreement, the closing conditions, and the timeline Halina's team had drafted all assumed the stapled lender would be in the room, reviewing the same numbers, working to the same schedule. Once the winning bidder chose to finance independently, several of those assumptions no longer held, and a transaction that had looked nearly settled suddenly needed to be rebuilt around a lender nobody on Halina's side had ever spoken to. It was at that point, with a signed letter of intent already on the table and a closing date already circled, that Halina's team called our office.

The problem

A stapled financing package exists to remove a variable, not to add one. When a seller arranges debt in advance and a buyer declines it, the deal does not automatically revert to a simple cash purchase. It reverts to something more complicated: a transaction where the seller's side has spent time and legal cost building conditions around a lender who is no longer part of the picture, while the buyer's own lender has never seen the transaction documents, never priced the covenants, and has no reason to accept a timeline built for someone else's diligence process.

The purchase agreement Halina's team had drafted contained closing conditions tied to the stapled lender's commitment letter, representations calibrated to that lender's diligence requirements, and a timeline built around a financing process that had already been mostly completed before the bid deadline. None of that applied to Agus's lender, who was starting diligence from zero and wanted covenants of its own on inventory turnover and customer concentration, some of which conflicted with commitments Halina had already made to the stapled lender under a standby arrangement that was never formally cancelled once the winning bid came in without it.

The complication behind this was not the buyer's choice, which was ordinary and well within the buyer's rights, and not something any lawyer could or should have argued against. It was the advice Halina had received before our office was retained. A family member, Sari, who worked as a letter carrier and had no transactional background but had strong opinions from following business news, had urged Halina to add a break fee that would apply if any bidder declined the staple, reasoning it would discourage buyers from letting the arranged financing go to waste after Halina had paid to set it up. Halina's team, wanting to be responsive and trusting the instinct, added the fee to the term sheet before any lawyer had reviewed the language or considered how it would be read from the other side of the table.

Agus's side read the clause exactly the way an unreviewed clause tends to be read: as a penalty for financing the deal on their own terms, and as a signal that Halina's side was not negotiating in good faith. By the time we were retained, that reading had already hardened positions on both sides. Removing the fee outright risked looking like a concession that would invite further demands from a buyer who now suspected the seller's paperwork could not be trusted. Leaving it in risked the deal collapsing before financing was even sorted out. The standby arrangement with the original lender also needed to be unwound cleanly, since it carried a modest commitment fee that Halina's business remained liable for regardless of who ultimately financed the sale.

What we did

1. Reviewed the term sheet line by line against the actual bid terms to identify which conditions depended specifically on the stapled lender being involved, since those were the provisions that needed to be rewritten rather than simply deleted, and there were more of them scattered through the draft than Halina's team had realized when they first flagged the issue to us.
2. Separated the break fee dispute from the financing dispute in our first call with Agus's counsel, framing the fee as an unreviewed drafting leftover rather than a considered negotiating position, which let both sides discuss it on its own terms without either side losing face over who had proposed it or why, since treating it as two separate problems meant the financing conversation could move forward even while the fee itself was still being worked out.
3. Negotiated a reduced, narrowly scoped fee that applied only if the buyer walked away from the deal entirely, not if they simply chose to finance independently, which addressed Halina's original concern about wasted effort on the arranged financing without penalizing a buyer's legitimate right to choose its own lender, giving Halina the protection she had actually wanted from the start rather than the broader deterrent that had put the deal at risk.
4. Rebuilt the closing conditions around the buyer's actual lender once Agus's financing source was confirmed, replacing every reference to the stapled commitment letter with conditions tied instead to the new lender's diligence checklist and funding timeline, so the agreement matched the deal that was actually happening rather than the deal Halina's team had originally drafted for, which mattered because closing on mismatched conditions would have left both sides guessing about what actually had to happen before funds moved.
5. Unwound the standby arrangement with the original lender in a way that limited Halina's exposure to the commitment fee, negotiating a partial reduction with that lender once it was clear its package would go unused, rather than leaving Halina liable for the full amount on a facility nobody would draw on, which turned an open-ended liability sitting on the company's books into a fixed, negotiated cost she could plan around.
6. Extended the closing timeline by several weeks to give the buyer's lender room to complete diligence that the stapled lender had already finished months earlier, which meant sitting down with Halina to reset her expectations about how quickly the sale would actually close after the delay, since a rushed timeline imposed on an unfamiliar lender was more likely to produce last-minute surprises than an honest, if less convenient, extension.
7. Adjusted representations and warranties that had been calibrated to the stapled lender's risk appetite, since the new lender's covenants required somewhat different disclosure on inventory turnover and receivables aging than the original stapled package had ever assumed, and the agreement had to reflect that, adding a further week of back and forth between the two lending teams before the disclosure schedule was finally settled.
8. Set up a short, structured check-in process for outside advice so that Sari's future suggestions, and any similar input from people close to Halina but outside the deal team, would be routed through the deal team before reaching a draft, with a plain-language explanation each time of why a given clause worked or did not, so the next idea would be tested before it was written into a document the other side could read.

The outcome

The sale closed, on terms neither side had originally proposed. Agus's side financed independently, as they had wanted from the start, working with a lender who had never been part of Halina's plan and who set the pace for the last stretch of the transaction. The break fee survived in a narrower form that both sides could live with, applying only to a full walk-away rather than to the buyer's choice of financing, and the standby commitment fee owed to the original lender was reduced rather than eliminated, since that lender had a contractual right to some compensation for work already completed on Halina's behalf.

The net effect on price was modest but real. Between the extended timeline, the legal cost of reworking the closing conditions around a lender nobody had planned for, and the partial standby fee Halina's business still owed after the fact, the deal closed at a figure somewhat below what the earlier, staple-assisted models had projected for a clean transaction. It remained comfortably within the range the transaction had always been expected to fall in, and Halina described the outcome as fair rather than as a win, which was an accurate read of it rather than a polite one.

What the matter avoided was worse: a collapsed deal over a clause that had never been meant as an obstacle in the first place, or a closing delayed indefinitely while two sets of lenders and two sets of lawyers argued past each other with no one clearly in charge of resolving it. The compromise held because both sides still had a real reason to want the transaction to close, and because the dispute was narrowed early to the one clause actually in conflict rather than left to spread and contaminate the rest of the negotiation. Halina's later comment to her team was that the stapled financing had been a good idea poorly protected, not a bad idea, and for a second sale she would build it the same way again, with legal review earlier in the process.

What you can learn from this