Morning Class Group 5 - The Market View of Mezzanine

The Market View of Mezzanine

The upsurge in mezzanine lending follows the general private-equity trend of abounding capital chasing a relatively low number of deals. It may also signal that more small companies are reaching a growth stage in which such financing makes economic sense. Warrants are used to "juice the return" by enhancing an investor's potential yield with equity, explains Ricardo Chance, a managing director with investment bank with Securities. But to an entrepreneur shepherding a growing company, warrants are a double-edged sword. While warrants help lure capital, they can cede a good deal of equity — and thus control — to the lender.