First Business Introduces Mezzanine Funding
MADISON, WI, – Nov. 7, 2006 – First Business Bank is now offering mezzanine funding through an investment with Aldine Capital Fund, L.P., with offices in Wisconsin and Illinois that will provide funding between $2 million and $8 million in investment size.
Mezzanine financing, also referred to as “mezzanine capital” or “junior capital”, allows borrowers to obtain unsecured debt financing based on cash flow rather than traditional collateral. It is a tool that can often fill the financing gap between owners’ equity and traditional bank financing, where the maximum bank loan might be capped by collateral requirements or other limitations.
Mezzanine financing is most often used for financing growth, re-capitalization, acquisitions, or ownership changes. Mezzanine funding strengthens a company’s balance sheet by adding needed capital while the provider focuses on existing cash flow in the overall repayment analysis.
Some common characteristics of companies funded with mezzanine capital include those with excellent performance histories, experienced management teams, an industry niche, and a history of strong customer relationships.
Key advantages of mezzanine financing include reduced ownership dilution (as compared with other forms of equity financing) and the opportunity for the business owner to repay the debt and purchase any equity from the mezzanine lender at a pre-arranged time and price. Nationally, large corporate banking and investment conglomerates offer mezzanine funding, but tend to target investment sizes of greater than $10 million for a single company.
“Most players in the mezzanine market tend to do larger deals and we believe there is a void, especially in Wisconsin, for mezzanine funding under $5 million. We feel this will be of great value to the business community,” says Mark Meloy, President, First Business Bank. “We often serve industries where growth and acquisitions create a need for capital,” he adds. “Mezzanine funding is a win-win-win scenario for borrowers, lenders, and investors. We are proud to be the only Wisconsin-based bank to offer this financing alternative.”
Each mezzanine deal will be negotiated on an individual basis and could fund investments for projects ranging from the development of technology to business succession. “We recognized a need in this market to expand financing options; however, we wanted to ensure our clients that we could do this in a way that provided direct access to decision-makers and the fast turnaround we guarantee in our traditional lending services,” adds Meloy.
Mezzanine funds are currently available. For further information on mezzanine funding, please contact Mark Meloy, President, First Business Bank, at (608) 238-8008. Or to set up an interview with a First Business management team member, please call Jodie Johnson at (608) 232-5910.
About First Business
First Business Financial Services is a Wisconsin-based bank holding company, focused on the unique needs of businesses, business executives and high net worth individuals. First Business offers commercial banking, specialty finance and private wealth management solutions, and because of its niche focus, is able to provide its clients with unmatched expertise, accessibility and responsiveness. For additional information, visit www.firstbusiness.com.