Mezzanine financing is an integral part of developed capital markets. It bridges the gap in a company’s capital structure between debt and equity.
Mezzanine Financing has a number of advantages for companies compared to the other traditional financing methods. These include:
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Being less expensive than equity financing |
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It avoids dilution of equity: Shareholders continue to operate more independently than would be the case if additional investors had rights to the capital. |
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Cash flow based (as opposed to collateral based) |
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Ideal for smaller-size companies who have limited access to financing |
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Easy to implement and quick to execute which makes it attractive for the smaller-size companies |
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More flexibility than classic bank debt arrangements |