MEZZANINE FINANCING
A non-conventional funding which is normally used to fund acquisitions and buyouts. Hybrid of debt and equity funding, it is basically debt capital that provides the lender the right to convert into an ownership or equity interest should the loan is not fully paid on time. It is composed of equity-based options (e.g., warrants) and lower priority debt. Banks and venture capital companies provide this financing.
Since this is normally given very fast with low due diligence on the lender, and has little or no collateral for the borrower, this is strongly priced which the lender aims to generate a 20-30% profit.
POPULAR TERMS
Target Return
Pricing model used in valuing a business based on what an investor expects from any capital invested in the firm. It is computed by adding the amou ...
Remainder Man
An individual who receives the remaining principal in a trust account after all required payments have been made, such as those to the beneficiary ...
Average Collected Balance
The total average of the collected funds in a bank account in a month. The balance is calculated by adding the collected balance and dividing it by ...
Bankable Funds
Forms of payment that are accepted at financial institutions. Retailers and other organizations that directly accept payments from customers typica ...
Prudent-Person Rule
A legal maxim that restricts the discretion in a client's account to investments that a prudent person seeking reasonable income and preservati ...
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