Mezzanine debt is a type of subordinated debt that ranks below senior debt but above equity in a company’s capital structure. It is typically used to finance acquisitions, recapitalizations, or other large capital expenditures.
Mezzanine debt is often seen as a hybrid between debt and equity. It has some of the characteristics of debt, such as regular interest payments and a fixed maturity date. However, it also has some of the characteristics of equity, such as the potential for upside if the company performs well. This makes mezzanine debt an attractive option for investors who are looking for a higher return than they would get from traditional debt, but who are not willing to take on the same level of risk as equity investors.