The Prudential Capital Group Guide to Mezzanine Financing

04.24.18

At the point in which capital needs exceed what senior debt lenders can provide, growing companies can instead use mezzanine financing to achieve their goals. 

 

Named for its place in the capital structure, mezzanine financing is a form of junior capital that sits between senior debt financing and equity. It is the last stop along the capital structure where business-owners can raise sizeable amounts of liquidity without selling a large stake in their company.

 

Mezzanine financing can be viewed as either expensive (i.e. higher coupon) debt or cheap (i.e. less dilutive) equity, since mezzanine carries a higher interest rate than the senior debt companies would obtain through their banks, thus, reflecting a greater risk than senior debt. However, it is substantially less expensive than equity in terms of overall cost of capital.

 

For many businesses, mezzanine is not viewed as permanent capital, but instead, solution-oriented capital that serves a specific purpose, and can later be replaced with lower cost capital (i.e. senior debt).

 

Mezzanine financing is also a patient source of capital due to it typically carrying a longer term until its final maturity (up to 7-8 years) as well as being interest-only with no amortization prior to maturity. As a result, mezzanine financing enables companies to accomplish their goals for growth; whether it is building a larger production facility or carrying out an acquisition that cannot be realized with only senior financing.

 

During the process of completing a mezzaning fianancing transaction, businesses will often take the opportunity to further ‘professionalize’ in developing more sophisticated business documentation.

 

With the Prudential Capital Group Guide to Mezzanine Financing in hand, you will have the necessary information to explore whether mezzanine financing is the right type of capital for you and your business.

Transformational Capital, the Prudential Capital Group Guide to Mezzanine Financing

We understand that many CEOs and CFOs may not have encountered mezzanine financing before, so this guide begins with a more detailed overview of what a mezzanine financing is, pricing and payment structure as well as pros and cons.

What Else is Inside the Prudential Capital Group Guide to Mezzanine Financing?

  • How Mezzanine Financing Compares to Other Types of Capital

  • The Role of Mezzanine Financing in a Capital Structure

  • Uses for Mezzanine Financing

  • What to Expect When You’re Raising Mezzanine Financing

  • The Value of Mezzanine Financing

  • Mezzanine Financing Case Study: MooreCo

Should you be merely gathering information on your capital options or preparing to raise mezzanine capital, the Prudential Capital Group Guide to Mezzanine Financing is your one-stop resource.

 


Interested? We would be happy to discuss how a mezzanine financing could work for you.

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