The most important characteristics of a mezzanine loan are:
Minimum loan amount is € 2.5M
Maturity depends on type of transaction and varies between 2 – 7 year
Grace period for loan repayment
Compensation structure consists of fixed interest coupon and variable component (Equity Kicker or Closing End Fee)
Why a mezzanine loan?
A mezzanine loan has multiple advantage and offers you as an entrepreneur flexibility.
A mezzanine loan has many advantages and offers flexibility for entrepreneurs. We are happy to share our thoughts regarding your financing proposition. In addition, we have short lead times and usually closing of a financing transaction takes place within 4 – 6 weeks after we have reached agreement on the terms and conditions of a mezzanine loan.
An overview of the most important advantages:
- Subordinated to bank debt, therefore guaranteed equity is increased and financing options at the (principal) bank are improved
- No collateral required (meaning all collateral remains available for principal bank)
- No threat to current relationship with principal bank (everything remains as is)
- Grace period for loan repayment
- Interest payments and financing costs are tax deductible (as opposed to dividend)
- No dilution for existing shareholders (only the effect of the Equity Kicker) and no exit pressure
- Limited to no changes in shareholders agreements and existing governance structure
- Standardized documentation combined with limited ‘due diligence’ results in a short