Mezzanine Finance

Bridging the Gap Between Senior Debt and Equity

Mezzanine financing is typically used for recapitalizations, expansion and growth, buyouts and acquisitions. Like nearly all offerings from Prudential Capital Group, it is patient capital that supports growth, while also being less costly than direct equity issuance. In addition, mezzanine-supported recapitalization is an attractive alternative to an outright sale of the business.

Structural Characteristics

  • Typically, subordinated debt with attached equity warrants
  • Principal repaid after senior debt has been fully amortized
  • Combination of cash coupon and deferred interest
  • Nominal warrants representing minority stake in issuer

Investment Focus

  • Middle-market companies with attractive growth prospects and positive cash flow
  • Company revenues between $50 million and $300 million
  • A preference for manufacturing, service and distribution businesses
  • Incumbent management teams with an economic stake in the company’s success
  • Mezzanine investment size of $10 million to $100 million

One-Stop Financing / Sponsorless Transactions

  • Can provide senior debt and common equity alongside mezzanine
  • Experienced at structuring and closing complex deals – often without equity sponsors
  • Capacity to execute large transactions