Mezzanine Financing
Mezzanine financing combines debt and equity in a flexible financing structure that is subordinate to senior debt but ranks higher than equity in the capital structure. It is often used to fund expansion, acquisitions, or buyouts, providing lenders with the potential for higher returns, typically through warrants or stock options. Mezzanine financing helps bridge the gap between debt and equity, offering capital without diluting ownership too heavily.
Key Takeaways
- Hybrid of debt and equity financing.
- Used for expansions, acquisitions, or buyouts.
- Subordinate to senior debt but above equity in the capital structure.
- Offers lenders higher returns through equity participation.
