Backstop Equity Commitment Letter
(Private Equity Investor)

Summary

This template Backstop Equity Commitment Letter evidences a private equity investor's commitment to provide equity financing, as credit support for (or a "backstop" to) a private equity sponsor's commitment, to fund an acquisition. Such an arrangement is commonly used in connection with a private equity club deal buyout. This template includes practical guidance, drafting notes, alternate clauses, and optional clauses. This template backstop equity commitment letter assumes the following: • There is a single equity investor funding the equity portion of the investor's transaction consideration. • There is a single equity sponsor funding the equity portion of the sponsor's transaction consideration. • The transaction to which the equity commitment relates is structured as a reverse triangular merger. • Funding for the underlying acquisition also includes debt financing – it is typical for a portion of the purchase price to be funded by debt financing in addition to any equity financing. This template should be modified as appropriate for your transaction based on the parties involved, the structure of the transaction, the sources of funding for the purchase price and other transaction consideration, and the business agreement of the parties. For a full listing of related private equity and financial reporting content, see Private Equity Transactions Resource Kit and Financial Statements and Reporting Resource Kit. For further information on private equity investments, see Private Equity Investment Structures, Preferred Equity in Buyouts and Growth Equity Investments.