Growing concerns: mezzanine money for smaller businesses

Companies (usually in the $5 million-$100 million sales range) which cannot arrange attractive bank loans and do not wish to surrender the amount of equity a venture capital firm demands should consider mezzanine financing. This arrangement involves a capital injection in the form of fixed-rate subo...

Full description

Saved in:
Bibliographic Details
Published in:Harvard business review 1987-05, Vol.65 (3), p.116
Main Authors: Torpey, William L, Viscione, Jerry A
Format: Magazinearticle
Language:English
Subjects:
Bonds
Equity
Financial institutions
Funding Sources
Interest Rates (credit)
Loans
Logos
Mezzanine financing
Middle Market
Small business
Venture capital
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Companies (usually in the $5 million-$100 million sales range) which cannot arrange attractive bank loans and do not wish to surrender the amount of equity a venture capital firm demands should consider mezzanine financing. This arrangement involves a capital injection in the form of fixed-rate subordinated debt and, usually, warrants to purchase equity (rarely exceeding five to 15%). The financer is thus both a lender and investor. Companies interested in mezzanine financing should determine their ability to service the debt.
ISSN:0017-8012