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818-591-0753 USA (West Coast)
646 358 3469 USA (East Coast)
Mezzanine Finance is the level of financing between senior debt and equity, typically issued in the form of subordinated debt or preferred stock with equity provided by a warrant, conversion feature or the outright purchase of common stock. Mezzanine financing is capital used in business acquisitions and business sales as well as a financing option for companies in transition.
- Project Finance
- Mine Monetization
- Royalty Based Finance - Mining
- Volumetric Production Payments - Oil and Gas
- Royalty Based Finance - Intellectual Property
- Asset Based Finance
- Trade Finance
- Commercial Real Estate Financing
- Accounts Receivables Financing
- Purchase Order Financing
- Purchase / Sales Agreements Monetization(Contract Monetization)
- Financial Instrument Finance
- Mezzanine Financing
- Senior Debt Finance
- Carbon Credit Monetization
- Tax Credit Monetization
- Business Strategy Consultancy
Typically, a mezzanine investor looks for overall returns of approximately 20 percent to 30 percent, depending on the perceived risk. This can be achieved with an additional interest typically, equity in the form of warrants to purchase common stock for some extended period of time. These warrants may come with additional conditions, such as pre-stated buy-back at a guaranteed price.
Enables gap between equity and operational finance requirements to be filled
Used during transitional periods in the life of a company when extra financing is required
Reduces dilution of owners equity
On the balance sheet of a company, it is treated like equity and may make it easier to obtain standard bank financing
Mezzanine Finance is not normally used to take an ownership position in a company
Can be described as "cheap equity"
Borrower Profile Characteristics
Track record in the industry, with established reputation and product.
A history of profitability, or at a minimum, breaking even.
A viable expansion plan for the business, whether through acquisition, broader penetration of the market, etc.
Strong cash flow
EBITDA > $4MM
Enterprise value of $15MM to $500MM
Favorable industry outlook
Management has an equity stake
Loan and warrants
2% to 8% more than senior debt
Expected return for lender - 20% to 30% IRR
Principal paid at termination of loan
Upfront Application fee 0.5% - 2%
Upfront Commitment Fee - 1% to 3%
3 to 10 years duration
Unsecured but may require a subordinate lien or other financial covenants
$5MM to $80MM loan requirement
May require board observation rights
If you would like to explore how our Mezzanine Finance Program may be of value to your company, please give us a call at 818-591-0753 USA (West Coast) or 646 358 3469 USA (East Coast) or +353 65 684 5862 or contact us
(Program descriptions, terms, benefits and characteristics are subject to market change)