MEZZANINE FINANCE refers to a form of financing that is between priority debt and equity financing in terms of risks and benefits. For companies and stock recommenders, mezzanine investment usually provides long-term financing in a very flexible form, which is less diluted than the stock market and can be adjusted according to special needs. The payment of mezzanine financing can also be decided according to the company's cash flow.

Financing enterprises can generally consider mezzanine financing under the following circumstances

1. Lack of sufficient cash for expansion and acquisition;

2. The existing bank credit line is not enough to support the development of enterprises.

3. The enterprise has a history of steady growth for many years;

4. Cash flow and EBITDA (operating income before deducting interest, income tax, depreciation and amortization) are positive for at least one consecutive year (the past twelve months);

5. The enterprise is in a growth industry or occupies a large market share;

6. The management firmly believes that the enterprise will have great development in the next few years;

7. It is expected that enterprises can go public and achieve a higher share price within two years, but the current IPO market situation is not good or the company's performance is not enough to achieve an ideal IPO, so the first round of mezzanine financing can reduce the total financing cost of enterprises.

This paper summarizes the information about mezzanine financing and expounds how this investment form plays a link role in the transactions that need financing. ?

Operating process?

● Make financial forecast according to the company's situation.

● Prepare business plans for investment institutions.

● Submit the business plan to the investment institution for demonstration and promotion.

● Cooperate with institutions with investment intentions to conduct due diligence.

● Negotiate the terms of investment agreements.

● Sign the agreement [2]?