Prudential Capital's Mark Hoffmeister, Matt Harvey, Steve Szejner and Julie Langdon describe how mezzanine financing can provide value to companies.
The fundamental characteristics of mezzanine financing benefit companies in a variety of ways, but the value can be largely attributed to it being less dilutive, the flexibility it provides as well as its patient nature.
When raising capital, most business owners strive to minimize the amount of equity they have to give up – mezzanine financing enables them to do this by maximizing total leverage with little to no equity dilution. A mezzanine-led recapitalization typically results in the existing shareholders retaining majority control of the company as well as controlling the board and management.
With mezzanine financing, the investor can provide capital beyond what a bank would typically be comfortable underwriting, thus, providing companies with the flexibility to achieve goals that require capital outside the limits of senior debt.
One of the key benefits of mezzanine financing is that it is patient during times of difficulty. Mezzanine financing is subordinate to the senior debt, from a structural standpoint, and does not usually require any amortization prior to maturity. Mezzanine financing also typically has a 7-8-year bullet maturity. This keeps the senior lenders comfortable as well as gives management the time needed to deal with any issues that arise before having to address that maturity.
Ultimately, mezzanine financing allows business owners to maintain control and fund growth goals or other needs beyond what their senior debt capacity will allow, while serving as a patient piece of capital in the background.
Interested? We would be happy to discuss how mezzanine financing could work for you.
Mark Hoffmeister is a Managing Director and Principal of Prudential Capital Partners, the middle-market mezzanine debt and equity fund management business sponsored by Prudential Private Capital. From 1996 to 1999, Mark led Prudential Capital’s Chicago Corporate Finance office, overseeing the private placement activity in Prudential Capital’s U.S. Midwestern territory. Mark has been an integral part of Prudential Private Capital’s mezzanine strategy since 1995, and has developed an extensive network in the mezzanine community. Mark serves on the Investment Committee of Prudential Capital Partners, L.P., Prudential Capital Partners II, L.P., Prudential Capital Partners III, L.P., Prudential Capital Partners IV, L.P. and Prudential Capital Partners V, L.P.
Mark received a BA and an MS from the University of Wisconsin at Madison. He holds the Chartered Financial Analyst® designation.
Matt Harvey is a Senior Vice President for Prudential Capital Partners, located in Chicago. He is responsible for originating and underwriting mezzanine and structured equity investments, managing the portfolio, supporting the firm’s fundraising efforts, and co-leading the team that supports mezzanine investment efforts. He joined Prudential in 2003, originally on a team in the Chicago Corporate Finance office responsible for private placement investments throughout the Midwest region of the U.S. Matt then joined Prudential Capital Partners in 2005 until 2012, when he relocated to the London office to lead Pricoa Capital Group’s mezzanine investment efforts, before returning to Chicago in 2015.
Matt received a BS from DePaul University.
Steve Szejner is a Senior Vice President for Prudential Capital Partners, located in Chicago. Steve joined Prudential Private Capital’s Chicago Corporate Finance office in 1999, where he was on a team responsible for private placement investments throughout the Midwest region of the U.S. Since 2003, Steve has been on the mezzanine team, responsible for originating and underwriting mezzanine and structured equity investments throughout the U.S., managing the portfolio, supporting the firm’s fundraising efforts, and managing the Chicago-based fund team that supports the mezzanine investment efforts of Prudential Private Capital’s U.S. Regional Office Network.
Steve received a BS from Boston College and an MBA from Northwestern University’s Kellogg School of Management.
Julie Langdon is a Vice President in Corporate Finance for Prudential Private Capital, located in Chicago. She is part of a team responsible for marketing, originating and managing private placement and mezzanine investments in Michigan and Wisconsin. She joined Prudential in 2013.
Julie received a BS from the University of Virginia and an MBA from the University of Virginia Darden School of Business.