Mezzanine financing can be particularly advantageous for organizations that are going through ownership transition, recapitalization, internal aggressive growth or an acquisition growth strategy.
Identification of the most appropriate investor for the stage of development of your company. Whether raising money for organic growth, acquisitions, or for a recapitalization event, business owners have several different financing structures to choose from. Reverse factoring is a short-term financing solution tailored to fit the needs of suppliers that serve large customers.
Recapitalization is a type of corporate reorganization involving substantial change in a company’s capital structure. It requires skill, legal understanding, and market savvy, otherwise, you can lose everything. Basically, it is debt capital, with current repayment requirements, but with rights to convert to an ownership or equity interest in a company.
Mezzanine capital allows organizations to exploit growth opportunities by extending a company’s total debt capacity beyond traditional bank lending limits. Mezzanine financing arrangements can provide added flexibility for developers and property owners when acquiring funds for their projects. While principal and interest are usually repaid quickly from available cash flow, your mezzanine debt has a more flexible amortization schedule that may include an interest-only period to facilitate growth.
Unfortunately, the only truly valid method would involve an analysis of revenue traction over time and overall profitability of the business model. •Structurally, it is subordinate in priority of payment to senior debt, but senior in rank to common stock or equity. Stonehenge is a thought leader in investment capital, producing strong returns for investors and impactful social returns for communities.
Mezzanine funding is simply the term used for funding the gap between your primary or first mortgage and the total development costs. Is a private investment firm that provides flexible capital solutions to natural resource organizations. Mezzanine lending is at the opposite end of the risk scale from cash-flow lending. Mezzanine finance is only available to a developer once the development has been approved and the initial financing facility (or senior debt) is in place (or about to be put in place).
Research has shown that mezzanine systems have gained a lot of popularity and their demand is very high.
Mezzanine capital is often a more expensive financing source for a company than secured debt or senior debt. The key to getting financing that is short-term to will have an identified primary and secondary way to obtain payment. The mezzanine ranks last in the hierarchy of a company’s outstanding debt, and is often financed by private equity investors and hedge funds. Its name is derived from the fact that it is in second position or the mezzanine layer.
Want to check how your Mezzanine Financing Processes are performing? You don’t know what you don’t know. Find out with our Mezzanine Financing Self Assessment Toolkit: