Glossary Term
Mezzanine Financing
Definition
Mezzanine financing is a hybrid form of funding that combines features of debt and equity. It typically involves unsecured loans or subordinated debt that may be converted into equity in the event of default or at a predetermined time. In the MedTech industry, mezzanine financing is often used by growing companies to fund product development, market expansion, or acquisitions without diluting ownership significantly.
Relevance to the MedTech Industry
Mezzanine financing provides access to capital for MedTech companies needing substantial funding for high-cost activities such as clinical trials, regulatory approvals, or scaling operations. This financing bridges the gap between initial funding rounds (like venture capital) and more permanent solutions like public offerings or acquisitions.
Additional Information & Related Terms
Related Terms
Senior Debt: Debt with priority repayment over mezzanine financing in the event of liquidation.
Convertible Debt: A loan that can be converted into equity at a later stage, often associated with mezzanine financing.
Equity Financing: Raising capital by selling shares, leading to ownership dilution.
Private Equity: Investment funds that often use mezzanine financing to support leveraged buyouts or portfolio company growth.
Subordinated Debt: Debt that ranks below other loans in claims on assets or earnings.