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Capital
for Growth-Oriented Companies
Carol Brennan (CT, MA) 413-237-6648
Field Rider (NH, VT) 207-773-3104
Nancy Gibeau (RI, MA) 508-254-7891
Tom Lee, 781.928.1100 ext. 112
MB Capital, an affiliate of BDC Capital, invests mezzanine capital from $750,000
to $5 million in companies that require additional capital
outside of conventional debt or equity financing channels.
Investments are typically utilized where there are strong
prospects for company growth, capital expansion, management
transitions or acquisitions. We work closely with other regional investment groups. Candidates
for mezzanine investments are typically growth-oriented companies
with one or more of these characteristics:
- Insufficient collateral for additional
bank financing
- No readily available equity sources
- Growth or acquisitions
causing excessive balance sheet leverage
Extra
Equity without Loss of Control
MB Capital has options for small to mid-sized business owners
to achieve growth objectives by providing mezzanine equity
to the balance sheet while retaining and maintaining control
of the company.
Subordinated Investments
with Two Equity Options
MB Capital investments are structured as subordinated investments
with equity features. The investment term is usually for
five years, requires payment of a market rate of interest
and requires regular amortization of the investment. The
equity component of the investment can take several forms. The first is a warrant-based arrangement structured
in a typical mezzanine format, giving MB Capital the right
to purchase a predetermined number of shares of stock in
the client company. These warrants are usually repurchased
by the client at the end of the investment period at fair
market value or under a predetermined formula. As an alternative
to warrants, certain clients may be offered a royalty structure
that allows the company to repay the equity feature during
the term of the investment with a predetermined royalty return
based upon a percentage of sales of the company.
This particular arrangement requires no stock ownership
in the company and may provide an attractive lower-cost alternative
to warrants. A combination of a warrant and royalty structure
may also be offered in certain situations.
Eligibility:
Businesses should be in an expansion
phase with revenues expected to increase as a direct result
of the infusion of capital. MB Capital will typically fill
an "equity gap" in
the company's financing efforts.
The funds can be used for acquisitions, capital equipment
or real estate purchases, working capital or other reasonable,
clearly identified business purposes.
APPROPRIATE SITUATIONS FOR
MEZZANINE INVESTMENT:
- rapid sales growth
- leveraged
buyouts
- mergers and acquisitions
- ownership
changes
- recapitalizations
- corporate expansions
- refinancings
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MEZZANINE
CAPITAL