What this seat involves
Leveraged finance lawyers document the debt used to fund PE acquisitions. In a typical LBO, the acquisition vehicle borrows a significant proportion of the purchase price from a combination of bank lenders, direct lenders, or capital markets investors. That debt needs to be documented, secured, and structured in a way that works for the borrower's business over a multi-year hold period.
At US firms, leveraged finance typically involves some combination of bank facilities (term loans, revolving credit facilities) and high yield bonds. The documentation is different from standard LMA banking work; US-style credit agreements are longer, more borrower-friendly, and use different conventions. The intercreditor agreement, which governs the relationship between different classes of debt, is one of the most technically complex documents in the practice.
Trainee-level work this seat is built around
You may not be asked to run all of this on a vacation scheme. This section explains the kind of work trainees and junior lawyers do, so the seat and its exercises make sense in context.
Document comparison
Running redlines between successive drafts of the credit agreement or intercreditor. The permitted payment baskets, restricted payment provisions, and covenant package are heavily negotiated and change materially between turns.
CP checklist management
Tracking conditions to closing; security package completion, legal opinions, structure chart sign-off, and regulatory confirmations often across multiple jurisdictions simultaneously.
Security perfection tracking
Monitoring security granted across the borrower group; share pledges, account pledges, IP assignments, real property security; and tracking registration requirements in each jurisdiction.
Covenant mechanics research
Researching specific covenant provisions; EBITDA definitions, basket mechanics, ratio-based permissions; and how they interact with the borrower's actual operating business structure.
Intercreditor analysis
Reading the intercreditor agreement to understand the waterfall, enforcement rights, and standstill provisions. On a unitranche deal, the Agreement Among Lenders does a similar job.
Structure chart maintenance
Keeping the deal structure chart updated as entities are incorporated, merged, or amended. Sounds administrative but is genuinely important on complex multi-jurisdiction transactions.
What you could do on a vacation scheme
Vacation scheme exercises are usually lighter than trainee work. They are designed to test research, document sense, commercial judgement and how clearly you explain unfamiliar material.
Debt stack explainer
You may be asked to map the different layers of debt in a simple leveraged deal and explain who gets paid first if things go wrong.
Covenant comparison
You may be asked to compare two versions of a covenant or basket and explain whether the borrower has gained more flexibility.
Conditions checklist
You may be given a simplified closing checklist and asked to identify missing security, corporate approvals or legal opinions.
Market research note
You may be asked to research unitranche, direct lending or high yield bonds and explain when one route might be used instead of another.
What good looks like at this stage
Clarify the task, have a proper go before escalating, explain your thinking and return clean work. The best vacation schemers are proactive and curious without creating noise.
Leveraged finance documents are long and changes between drafts can be subtle. At this stage, a good standard is understanding what changed between versions of a document, asking why it changed, and using those questions to learn how the negotiation works.
Research to do before you start
- Understand the basic LBO structure: what a term loan B is, how the revolving credit facility works alongside it, and why the debt is structured in tranches with different pricing and priority.
- Read about the difference between a US-style credit agreement and a standard LMA facility agreement; the covenant-lite structure, incurrence-based covenant package, and different basket mechanics.
- Know what a high yield bond is and when it's used alongside or instead of bank debt. Understand the distinction between secured and unsecured notes and where they sit in the capital structure.
- Understand what an intercreditor agreement does; how it governs the relationship between senior and junior lenders, who controls enforcement, and what the standstill provisions mean in practice.
- Look at current conditions in the leveraged lending market: direct lending versus bank syndication, the rise of unitranche, and how higher rates have affected LBO economics and deal structures.
- Know the firm's leveraged finance practice; which sponsors they regularly act for on the debt side, and whether they act for lenders, borrowers, or both.
Questions worth asking
Has the lending environment shifted towards direct lending, and has that changed how leveraged finance deals are negotiated?
Demonstrates awareness of the structural shift in the leveraged lending market. The answer will reflect genuine market experience.
Tell me more about how the intercreditor agreement works. What is the normal structure when this is used?
Specific, technically grounded. Shows you've looked at what the document actually does rather than just knowing its name.
When you're acting on the borrower side, how do you balance the sponsor's desire for maximum covenant flexibility against the lenders' credit requirements?
A question about commercial tension rather than mechanical execution. Invites a practitioner to describe where deals are actually won and lost.
Is there still meaningful high yield bond activity in Europe, or has the market effectively consolidated around direct lending for most mid-market sponsor deals?
Topical and market-aware. The answer tells you where the work is flowing in the current cycle.