Way of working

A mezzanine loan is a subordinated loan which is used to (co)finance growth, acquisitions or management buy-outs. Read here more about what we finance and how we finance.

What do we do?

How do we finance?

Our focus

Growth

Management Buy-out

Acquisition

Growth

Would you like to finance your growth plans?

The market is full of growth opportunities, however, you are looking for additional liquidity to finance this growth?

During the search for growth financing you can reach a limit with your own bank, as the bank finds it hard to finance (international) growth, for example due to the limited collateral within the company. Furthermore, as a shareholder you might have limited capital or the company has a broad shareholder base with different interests. This could lead to complex discussions regarding valuation and dilution.

A mezzanine loan can offer a solution. This type of financing provides entrepreneurs with liquidity and flexibility to realize your growth plans. Due to the subordinated character the collateral remains available to the bank, it strengthens the guaranteed capital and it eases the discussion between shareholders.

Practical examples

Spotzer

Digital Marketing

September 2017

Talkwalker (exit)

Social Media Analytics

December 2016

Management Buy-out

Are you thinking about succession or having management participating as a shareholder?

A management buy-out (MBO) is an interesting way of (phased) succession of management and shareholders and is often referred to as a ‘pre-exit’. As a result of a MBO selling shareholders can secure part of the value of the company and simultaneously offer management the opportunity to acquire a shareholding.

Usually, a MBO transaction is financed with a combination of debt and equity from (new) shareholders. By using an ideal level of debt shareholders can realize attractive returns. The most common (and cheapest) form of debt financing is provided by the bank, however banks do not provide unlimited financing. The remainder has to be financed by other sources. Not all situations are suited for inviting a private equity investor, as they for example require a majority stake in these types of transactions.

A mezzanine loan can offer a solution. It is a type of debt that works as capital. The principal amount is subordinated to bank financing and provides additional leverage so you as shareholders can remain in control.

Practical examples

BTC

ICT Services

March 2018

DataManagement Professionals

Data Management

July 2017

The Valley

Marketing & Communication

June 2016

Acquisition

Are you planning on doing an acquisition and are you looking for the ideal financing structure?

Realizing an acquisition is an attractive way to accelerate growth. You can enter new markets (internationalization), increase your market share or expand your product portfolio.
To finance an acquisition you can make use of several sources of financing. Usually this is a combination of debt and equity. Bank financing is the cheapest form of financing.

However, the bank is not an unlimited source of financing, so you need to attract other sources of financing. The funding power of shareholders might not be sufficient enough to fully finance this remainder. Also it may be the case that shareholders sometimes have different interests.

A mezzanine loan can be a good addition to bank financing while financing an acquisition. By making use of leverage, the transaction becomes more attractive for shareholders.

Practical examples

OnGuard

Credit Management Software

November 2016

The most important characteristics of a mezzanine loan are:

Minimum loan amount is € 2,0M

Maturity depends on type of transaction and varies between 2 – 7 year

Grace period for loan repayment

Compensation structure consists of fixed interest coupon and variable component (Equity Kicker or Closing End Fee)

Why a mezzanine loan?

A mezzanine loan has multiple advantage and offers you as an entrepreneur flexibility.

A mezzanine loan has many advantages and offers flexibility for entrepreneurs. We are happy to share our thoughts regarding your financing proposition. In addition, we have short lead times and usually closing of a financing transaction takes place within 4 – 6 weeks after we have reached agreement on the terms and conditions of a mezzanine loan.

An overview of the most important advantages:

  • Subordinated to bank debt, therefore guaranteed equity is increased and financing options at the (principal) bank are improved
  • No collateral required (meaning all collateral remains available for principal bank)
  • No threat to current relationship with principal bank (everything remains as is)
  • Grace period for loan repayment
  • Interest payments and financing costs are tax deductible (as opposed to dividend)
  • No dilution for existing shareholders (only the effect of the Equity Kicker) and no exit pressure
  • Limited to no changes in shareholders agreements and existing governance structure
  • Standardized documentation combined with limited ‘due diligence’ results in a short
    lead times

Sector focus ICT

Benelux & DACH

FTE > 20 employees

Revenue > € 3M

Profitable growth

Multiple shareholders

Do you want to know if you fit within our focus?

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1. How many employees does your company have?

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2. In what market segment are you active?

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3. What is your revenue level?

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4. What financing solution are you looking for?

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