For more than three decades, Aegis Capital Corp. has provided investment banking services for clients in the mid-market space. Aegis Capital Corp. regularly assists clients with broad based private debt and equity financing as well as mezzanine financing.
Mezzanine financing refers to the segment of a company’s capital situated between common equity and senior debt. Typically appearing in the form of preferred equity or subordinated debt, mezzanine financing provides a number of benefits for companies.
For companies with relatively little in the way of collateral, mezzanine financing provides a means of securing funding for growth. Borrowers can also use mezzanine financing to diversify an owner’s holdings, often in response to reinvestment of personal dividends back into the business.
On the lender side, mezzanine capital arrangements often include provisions for a warrant, which enables investors to convert their holdings to common stock if the company begins performing well. Mezzanine debt also features higher yields than more senior debt or secured debt. Because mezzanine financing is usually subordinate to senior debt, however, the risk of default on mezzanine capital is also elevated.