Risk capital in the form of unsecured loans with equity character; loans that fill the financing gap between equity and debt in the capital structure, especially for growth companies and for takeovers and leveraged buyouts. – Mezzanine capital is often the generic term for all unsecured forms of credit, such as silent partnerships or profit participation rights. It describes a hybrid financing instrument with very different characteristics. In general, a distinction is made between – equity mezzanine capital (junior mezzanine) and – debt mezzanine capital (senior mezzanine). – The mixture of equity and debt capital – primarily in the case of start-ups (new business starts) – in such a way that, in the event of bankruptcy, equity capital is given priority and debt capital is subordinated. The equity is thus less exposed to risk, while the debt can share in the profit opportunities to compensate for this. – See equity kicker, first loss tranche, credit derivative, credit extension, leveraged buyouts, London process, mezzanine fund, subordinated loan, originate-to-distribute strategy, private equity financing, private placement, ranking theory, venture capital, roll-up, true sale securitization, securitization. – Cf. Deutsche Bundesbank Monthly Report of April 2004, p. 27 ff., Deutsche Bundesbank Monthly Report of October 2005, p. 87 (Issues of subordinated liabilities by German banks 1990 to 2004), Deutsche Bundesbank Monthly Report of April 2007, p. 16 f. (Position of mezzanine creditors in leveraged buyouts).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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