Cerebro revolutionizes commercial lending with data-driven processes that help middle market companies find and close a better mezzanine financing deal.
Mezzanine financing is available to growing operating companies with EBITDA over $2 million and a maximum debt-to-EBITDA ratio of 3X to 5X, and typically has the following criteria:
Mezzanine Financing is an Excellent Option for Middle Market Companies Seeking to Grow, Expand or Acquire
Mezzanine financing is a capital resource that sits between senior debt and common equity in the form of subordinated debt, or a combination of the two securities. This structural flexibility allows mezzanine financing to be tailored to accommodate a number of objectives, and when exploring a new source of corporate financing, it is imperative companies find a lending partner to understand and meet their specific needs.
The traditional approach to sourcing a mezzanine lending partner often takes months to years, with no efficient way to compare potential partners and ensure you find and close the better deal. Cerebro’s revolutionary platform changes that by using data-driven processes to match your request to our network of 800+ pre-qualified lenders, eliminating time-consuming screening calls and meetings, enabling you to compare term sheets side by side and guiding you every step of the way to help you find and close the better deal, faster.
*Cerebro Capital currently does not support investment real estate deals, project financing, startups or pure equity transactions.
larger loan amounts
*These rates are averages, calculated from current and past Cerebro Capital clients.
The Cerebro Difference
Cerebro Capital is revolutionizing the way middle market companies find and close mezzanine financing through our data-driven platform, national lender network and proprietary matching process.
When you work with Cerebro, the days of reaching out to brokers, debt placement advisors or funds individually, wasting time on redundant screening calls and wondering if you’re getting a competitive term sheet are over. Our platform pulls real-time lender data and matches your deal against the profiles of our 800+ lender network, while keeping your information confidential, matching you with the ones most likely to be interested in competing for your business – and because we have relationships with each of those lenders, your deal gets preference in the market.
Once your deal has been matched with interested lenders, you select the lenders that you want to share your information with and the Cerebro platform facilitates due diligence and negotiation in our deal room, making it easy to manage requests and giving you peace of mind that your company’s information is kept confidential. Throughout this process, our expert transactions team provides you with market data from similar companies and works with you to ensure you get – and close – the better deal.
The results companies have achieved working with Cerebro speak for themselves: Sourcing loans from $2-100 million, Cerebro gets your loan profile lender interest within 48 hours, reduces interest rates by an average of 20%, increases loan amounts on average by 22% and reduces fees by up to 41%.
lenders on the network
managed loan facilities
*Accessing the market timeline is dependent on data room population.
Is Mezzanine Financing Right for You?
Mezzanine financing combines the advantages of senior debt and common equity to form one of the most flexible types of debt capital financing available to middle market companies. The capital obtained through mezzanine financing can be used for everything from growth capital or acquisition financing to shareholder liquidity, inter-generational transfers or research and development. It is an ideal financing vehicle for middle market companies that are in need of additional capital beyond what is available through traditional senior lenders at a cost that is often lower than that of equity financing.
PROS of Mezzanine Financing
CONS of Mezzanine Financing
Do you have capital needs beyond what your senior lenders can offer?
Do you have immediate goals that require growth capital?
Are you looking to expand your access to capital without selling your business or making personal guarantees?
Is your company looking for acquisition financing that is cheaper than equity and more flexible than senior debt?
If you answered yes to any of these questions, mezzanine financing could be a great option for your organization. Find out how we can help you get started.
Next Steps Toward Securing Mezzanine Financing
We offer you access to our proprietary technology and expert capital markets team to match you with a lender and secure financing to support your business needs. Let’s get started:
Complete our complimentary Loan Assessment, in as little as 15 minutes, to help us learn more about your financing needs. This information is 100% confidential and will not be shared with third parties.
Receive a summary analysis of your request, including:
- Your available lender options
- Your borrowing capacity based on current and historical finances
- Your expected terms and rates
We bid out your request and use data-driven processes to match you with our network of over 800 lenders, each of which we have personal relationships with to give your loan preference in the market.
Invite qualified lenders into our private, confidential data rooms to compete for your deal. In our data rooms, you’ll receive term sheets, compare lenders and close a deal for your company – with better rates and a faster closing timeline compared to traditional methods!
“Partnering with Cerebro Capital to support our mezzanine financing needs was one of the best decisions we’ve made as a company. We spent months meeting with mezzanine funds trying to find one that would take on our profile, and with Cerebro, it took about two days to be matched with 11 qualified mezzanine financing lenders – beyond just mezzanine funds, who actually competed for our business. We were able to compare rates and terms to find the deal that was perfect for our situation, with competitive results – even better, Cerebro helped us close the deal in just six weeks! We’ll be partnering with Cerebro for all of our financing needs moving forward.”
– CFO, National Manufacturing Company
A Deeper Look Into Mezzanine Financing
Rather than senior debt or equity, mezzanine financing is a flexible capital source that is a good option for companies with high growth profiles with top-line revenue growing at 15% or more and healthy, consistent cash flows for a sustained period. Private equity funds or small business investment companies (SBICs) are the typical mezzanine lenders. Mezzanine funds are most comfortable providing mezzanine financing to companies with an EBITDA of $2MM or more, but each mezzanine fund has its own profile.
Mezzanine credit facilities are structured as a combination of debt and equity securities, tailored to the unique needs of the borrowing entity:
- Cash Interest Payments: a periodic cash payment based on a percentage of the outstanding balance of the mezzanine financing. The interest rate can either be fixed, variable based on a base rate (i.e. LIBOR), or a combination thereof (for example, the rate could be fixed for a certain period, then variable thereafter).
- Payable In Kind (PIK) Interest: PIK is a periodic interest payment, where the payment is added to the principal instead of being paid in cash. This structure can alleviate short-term strains on cash flows.
- Ownership Interest: Mezzanine capital employs a number of different instruments to convey ownership interest, including preferred equity, warrants and/or conversion features (similar to a convertible bond). The specific mix of securities used depends on the nature of the financing and the preferences of the borrower and mezzanine lender.
How Mezzanine Financing Can Support Your Business
With more flexibility than traditional banks can offer, while maintaining substantial equity, mezzanine financing can support otherwise-challenging business objectives for middle market companies, including:
Mezzanine financing is an effective vehicle for owners of closely-held, private companies to obtain liquidity and diversify their holdings, without selling the business or providing personal guarantees to a senior lender – allowing owners to diversify their holdings or recoup years of cash flow reinvestment via a one-time dividend.
For an expansion-oriented company, obtaining the capital required for an acquisition can be challenging – often requiring the company to either (i) raise additional capital via equity investors or (ii) find a traditional bank lender willing to finance the deal, then accept restrictive terms and covenants. Mezzanine debt provides a solution that is cheaper than equity, but more flexible and less burdensome than senior debt – all while delivering a higher return to current equity holders.
Mezzanine financing can be well-suited for established middle market companies seeking to expand operations into new markets, increase capacity or make investments in research & development, but which lack the access to commercial paper or global credit markets enjoyed by large-cap companies. For companies in this position, mezzanine financing offers a solution that is cheaper than equity and more flexible than senior debt.
Ownership Transition / Inter-Generational Transfer
For shareholders of closely-held, middle-market companies seeking personal liquidity along with a transfer of ownership to other current shareholders – either a younger generation or the current management team – mezzanine financing is ideally-suited to facilitate this outcome. In this situation, rarely does the younger generation or management team have the personal assets required by traditional senior lenders to finance the purchase. Mezzanine financing provides an ideal vehicle to facilitate this transition for the reasons stated above: it is less dilutive and less expensive than equity, and doesn’t come with the capital requirements or restrictive covenants demanded by senior lenders – allowing the outgoing shareholders to receive a fair market value on their equity and the new majority owners to naturally leverage their return.
As demonstrated by the above examples, mezzanine financing is an ideal financing vehicle for middle market companies in need of additional capital beyond what senior lenders are willing to offer, while maximizing total leverage with little equity dilution and little to no principal amortization. Mezzanine debt provides more flexibility than traditional bank loans. Borrowers typically gain 4x or more in cash flow leverage, especially at the initial outset of the term of the loan.
How Cerebro Capital Makes Corporate Financing Simple:
Using our data-driven technology and tools, borrowers can access an estimate of available loan options, borrowing capacity, borrower strengths and weaknesses, personalized lender matches and secure data rooms – all in one place – so you can save time and make the best decision for your business, while working smarter, not harder, with support from our expert capital markets team.
We make it easy and find the right lenders for you
Our data-driven platform matches you to lenders, from our 800+ network, likely to be interested in your loan – eliminating the need for tedious, time-consuming screening calls and meetings.
We are fast and targeted
We get your loan profile to the market and receive lender interest within 48 hours, often less time than it would take to schedule a single potential lender meeting with the traditional approach. We don't just help book meetings faster, we get better deals done faster compared to the traditional approach.
We get you a better deal
Our real-time market intelligence provides transparency while our data-driven matching process and a targeted group of lenders from our national network compete to win your deal, helping you obtain better rates and terms.
We help you navigate the process
While you remain in control of the process, our expert transactions team is available to guide you – streamlining the debt sourcing process, ensuring confidentiality and eliminating hurdles to help you close faster.
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