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European investors are resolute against anti co-op language, despite the struggle for paper. But with M&A only slowly recovering, how long can that unity last?

The freshest example came from Advent’s high-profile (and long-awaited) Essential Home carveout from Reckitt, as reported by 9fin last week.

It’s not the first time Advent has tried; July’s Kereis transaction also faced resistance over anti co-op language.

We’ve previously reported on other examples of anti co-op language in Europe. KKR’s Stepstone for example and, more recently, PAI Partners’ Motel One both had these clauses removed due to investor pushback.

Advent and PAI Partners declined to comment. KKR did not respond to a request for comment.

A banker noted “lenders are still presenting a united front” against sponsor attempts to include anti co-op language.

“The market is going to stay disciplined,” a lawyer said. “They know from experience that once you allow it in, it’s very hard to turn the tide.”

That said, sponsors may try to slowly chip away at co-ops by focusing on specific situations.

In the US, Warner Bros Discovery inserted language whereby co-ops were acceptable as long as they did not restrict lenders from taking part in a new issue. That was deemed more palatable than a generic co-op ban.

Lenders will hope this isn’t the first crack in the dam.

If slow supply persists, the danger is that investors could reluctantly accept outright co-op bans. After all, sponsors wield more power in a credit market with fewer new money deals.