Mezzanine fi nance as the type of fi nancing placed between the shares issue and the bank credit
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Abstract
Company in order to grow needs financing. The classic way is to acquire a credit from the bank. This is directly linked with the question of collateral what in case of the company is not the obvious choice. Another classic way of fi nuancing the company is the share issue. This solution is however linked with the question of ownership that is unavoidably diluted with every issue. Sometimes the company is on a excellent path of growth, does not want to disperse ownership, has already used all available asset for a collateral and still needs some capital because of the scale of the project. In this case the solution might be any of private capital sources. The possibility known since the 80’s is “mezzanine finance”. This is financing that combines some features of credit with some features of share issue and comes from the private investors. Because of its collateral, investment time range and the ways of running the company it is perceived to be appropriate for several years large projects generating sizeable and stable cash flows. This is as well a good path of development for the family run businesses where there is no evident heir and the management wishes to take over the company but lacks sufficient capital. Particularly in the times of crisis when the banks impose tight rules on credit policy and the stock exchange investors are reluctant to take any risks the mezzanine finance may be an answer for companies capital needs.
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How to Cite
Juszczyk, S., & Nagórka, A. (2009). Mezzanine fi nance as the type of fi nancing placed between the shares issue and the bank credit. Zeszyty Naukowe SGGW - Ekonomika I Organizacja Gospodarki Żywnościowej, (78), 47–58. https://doi.org/10.22630/EIOGZ.2009.78.81
References
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