Mezzanine Capital

Mezzanine capital is a hybrid form of financing positioned between classic equity and debt. The term derives from the intermediate floor ("mezzanine") and describes capital that ranks behind senior debt but ahead of pure equity. Typical structures include subordinated loans, silent partnerships, profit participation rights and convertible bonds.

In M&A and buyout transactions, mezzanine capital fills the funding gap between senior debt and the equity contributed by the investor. It is more expensive than a classic bank loan but barely dilutes the ownership structure, since it rarely carries full voting rights. It often includes equity kickers such as options or conversion rights that give the lender an additional upside.

For mid-sized companies, mezzanine is an attractive way to finance growth or succession without giving up control. It complements instruments such as bridge financing and plays a central role in equity financing and private equity structures. Talk to us about the right structuring.