Efficiently Tailored—Flexibly Structured
Mezzanine capital is a debt/equity hybrid security that falls between bank senior debt and equity thus creating a more efficient capital structure. Companies utilize mezzanine when capital needs exceed traditional bank lending capacity, yet their future cash flow will support additional, subordinated debt. Mezzanine capital is flexibly structured around the company’s cash flow to meet the unique needs of each business and its owners.
Mezzanine debt is generally sought by companies and equity sponsors because it has the following characteristics:
- Structuring flexibility with long-term limited amortization requirements (patient capital)
- Tax efficiency from interest payments
- Lower shareholder-dilution relative to equity