Importance of Mezzanine Capital In Funding Firms
When a company lacks the necessary capital to fund its business, it must look elsewhere to receive capital in the form of a loan. The importance of mezzanine capital in funding firms cannot be overstated.Mezzanine capital is a reliable source of funding for businesses. It is flexible, patient and low cost capital.
These attributes explain the importance of mezzanine capital in funding firms that are in an acquisition or growth mode. For example, if a company is looking to acquire another company, the acquiring company will look for a lender to provide them with the capital to complete the acquisition.
Mezzanine lenders do not look at companies the same way that bank and equity investors do. Mezzanine lenders look at the past and projected future performance of the company. The importance of mezzanine capital in funding firms is that it provides the firm with a loan that has a flexible,long term repayment structure. It can provide capital to a firm and give the firm the power to move forward with deals and bold moves that will make the company a great company. The importance of it in funding firms is clearly the fact that it opens up doors for firms for fast growth. An acquisition may not be an option without the funding help that comes from mezzanine capital.