Definitions for "Mezzanine Finance"
A form of finance which has characteristics which place it between debt and equity.... more on: Mezzanine finance
A type of second tier funding capital midway between debt and equity in that it offers a higher interest rate than senior debt but provides a lower long term return than equity. This allows large deals to be structured in the best Suitable method for investors and lenders. Often used in management buyouts.
As the name implies, a half way position between equity capital and debt. The UK form of mezzanine finance fills a useful role in transactions such as large buy outs. Those leading the transaction raise as much equity capital as they can and as much senior debt as possible but there may still be a gap. Mezzanine finance can bridge the gap by offering a higher rate of interest than that offered on the senior debt in return for taking on more risk and there is often the added attraction of vouchers to subscribe for equity if the company floats or is sold.
A loan advanced prior to a firm going public. Venture capitalists are active at this stage of a corporations growth.