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Barclays Leads LBO Financing Retreat After Del Monte Slap

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Barclays Plc is leading investment banks in a retreat from a form of leveraged buyout financing that has made the firms and their clients vulnerable to allegations of a conflict of interest.

Barclays changed its policy following a February opinion from a Delaware judge, who said the bank deceived Del Monte Foods Co. when it advised the company on a sale and failed to disclose its plans to also arrange funding for the buyer until late in the process. That funding, also known as sell-side financing, allowed Barclays to collect about twice as much in fees than it would have gotten from just offering M&A advice.