What is Mezzanine Finance?

Mezzanine Finance is a cost effective way to fund long term growth. It normally involves giving up a small equity warrant and paying a slightly higher interest rate than loans from traditional institutions. Core has been active in this area for many years and can bring all its experience and skills to reach a successful and positive outcome.

Mezzanine financing is a hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. It is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.

Mezzanine debt is the middle layer of capital that falls between secured senior debt and equity. This type of capital is usually not secured by assets, and is lent strictly based on a company's ability to repay the debt from free cash flow. It is usually a great way for growing businesses to bridge the gap between what conventional banks will lend against assets, and the total value of a new project or acquisition.

A company owner should consider Mezzanine debt instead of equity when the business is producing stable free cash flow, since this allows them to obtain financing without issuing equity and diluting the ownership of the business.

Mezzanine financing is a particularly appealing form of liquidity for owners of privately held companies. It is traditionally understood that a privately held company simply cannot achieve the same sort of fluid capital flow as a publicly held company, but Mezzanine financing offers a way to balance that situation without going public.

When receiving Mezzanine financing from Core, it is important to note that we do not retain an interest in the company except in the event of a default. Core actively does not want an interest in the company. While traditional equity investors are often striving towards some level of control, a displeasing thought too many private owners, with Mezzanine financing one can rest assured that the Core will do what they can to ensure you pay off your debt without resorting to default.

For businesses looking for a quick injection of capital to grow their already successful business, without giving up an interest, Mezzanine financing
can be an ideal solution. Our team at Core has the knowledge and experience to set up this kind of financing for a positive outcome.