Procurement of mezzanine loans
Procurement of mezzanine loans
In the case of mezzanine loans, neither voting rights nor company shares are transferred.
Mezzanine loans are often used when the company does not want to or cannot give up voting rights or shares in the company. As the German Commercial Code only describes a few minimum requirements, the contractual partners are relatively variable in the structure of the loan. In terms of the balance sheet, this form of financing is positioned between equity and senior debt capital.
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Advantages for companies
Lenders may not only contribute financially, but also actively (working capital). This means that you can often benefit greatly from the experience of the lenders and their networks.
This form of financing is suitable for innovative models that currently require capital and can bear the interest relatively easily and repay it at the end of the term.
At the end of the term, the mezzanine loan may be convertible into an equity participation (shareholding)
As the valuation of the company at the later date is often significantly higher than when the loan was taken out, this can reduce the dilution of the shareholder structure.
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