When is it time to step up to the mezzanine?
|Barry Giddings explains how mezzanine funding could be used to support an acquisition| A company would normally use mezzanine funding specifically to assist an expansion of its existing operations or to acquire additional facilities while removing the need to dilute the existing shareholdersÂ¹ equity base. The typical terms on which mezzanine funding is advanced will include an obligation to repay the sum advanced in one payment on a predetermined date. Normally the redemption date is between the third and fifth anniversary of the funding being advanced. A company would normally use mezzanine funding as short-to medium-term funding during a period of development, expansion or acquisition. Once this period is over the company could consolidate its position and look to replace the mezzanine with longer-term senior debt funding. There is a limited number of banks and specialist funders providing mezzanine finance. The ability of a company to secure mezzanine funding will be determined by the strength of its cas