Mezzanine Financing

Mezzanine Financing is a form of capital that blends debt and equity financing, typically used by companies in the growth or expansion stage. It is often used when a company is looking to raise capital but does not want to dilute equity through additional stock issuance or take on traditional debt. Mezzanine financing is often provided in the form of subordinated debt, which can be converted into equity if the company fails to meet repayment terms.

Mezzanine financing is typically used in situations such as leveraged buyouts (LBOs), expansion financing, or to bridge the gap between traditional bank loans and equity financing. The lenders who provide mezzanine financing take on higher risk than senior lenders but are compensated with higher returns in the form of interest payments, equity options, or warrants.