Bridge Financing

Bridge financing is a short-term loan that closes a timing gap until permanent financing is in place. In an M&A context it typically bridges the period between signing and the final capital structure, for example until a bond issue, a capital increase or a long-term bank facility is secured. It allows the buyer to act quickly without waiting for the usually lengthy structuring of permanent funding.

Bridge loans are characterised by short maturities ranging from a few months to one year and comparatively high interest rates, because they carry an elevated refinancing risk. They are frequently used in a leveraged buyout or alongside equity financing. Repayment is achieved through the so-called take-out, the planned follow-on financing.

For German Mittelstand companies, careful structuring is essential to keep the take-out risk contained. We support you with the transaction structuring and review alternatives such as mezzanine capital.