Mezzanine debt structures are most commonly found inleveraged buyouts. A private equity firm might seek to purchase a company for $100 million with debt but the lender only wants to put up 80% of the value and offers a loan of $80 million. The private equity firm doesn't want to put u...
Mezzanine Debt Mezzanine debt is when the firm takes a loan without providing any collateral. So, if the borrower is unable to repay the loan and the loan defaults, the lender has the option to convert the debt into equity. That is, the lender can become a part owner of the borrower’s...
tranches: senior, mezzanine, and junior. Each tranche has a different level of risk and, therefore, a different level of return. Senior tranches have the least risk and the lowest returns while junior tranches have the highest risk and the highest returns. Mezzanine tranches sit between the ...
Specialty debt can take many forms, each designed to serve different purposes and industries: Mezzanine financing:This is a hybrid form of financing that combines elements of debt and equity. It typically involves subordinated debt with embedded equity instruments, such as warrants, allowing lenders ...
2. Debt Financing:It is when the acquiring firm borrows money from lenders to fund the merger/acquisition. Debt financing may include bank loans, bonds, or other types of debt securities. 3. Mezzanine Financing:It is a combination ofequity and debt financing. It typically involves issuing debt...
including technology startups, healthcare firms, and industrial companies through venture capital and growth equity funds. They also invest in buyout funds, which may focus on acquiring control positions in more mature companies, and mezzanine funds, which provide subordinated debt with equity features...
Understanding tranches is essential for investors and financial professionals involved in structured finance, as it provides insights into the risk and return dynamics of complex financial products. For further exploration, topics such as securitization, risk management, and investment strategies provide deep...
Hedge Funds and Institutional Debt Investors Additionally, two other participants in the syndication process are the: Agent: Serves as the point-of-contact for information and communications to flow among all parties Trustee: Responsible for holding onto the securities associated with the “secured” ...
BondsConvertible BondsCovenant-Lite LoansSyndicated LoanBridge LoanFinancing FeesMezzanine FinancingConversion Ratio Table of Contents What are Convertible Bonds? Convertible Bond Features: Hybrid Financing Instruments Convertible Bonds Investing: Debt and Equity Component Convertible Bonds: Lending Terms ...
Recapitalization refers to measures taken by companies to adjust their debt-to-equity (D/E) mixture within their capital structure.