Mezzanine finance is a complex financial product that is a hybrid of debt, equity and financial instrument. Traditionally used in complex M&A transactions by large corporates, they are being used by smaller entities today.
Similar to venture debt, mezzanine finance is traditionally more expensive than senior debt as it is not secured against a meaningful asset.
Should the business perform, then the finance is paid like any other finance however, the instrument enables the holder of the debt to turn that to an equity holding of the business, potentially acquiring it in full.
