Mezzanine Capital
The mezzanine financing is that equitable interest capital increase for family business the German middle-class faces a profound change with a weak capital of only 7% and against the background of the Basel Capital Accord (Basel II). While borrowing was common and appropriate means to meet the financing needs, family-owned company must determine today increasingly that this way of raising capital is denied to them. Companies are therefore faced with the task to probe Bank-independent solutions to bring the company’s development on the right track. What can companies do now but to execute necessary and meaningful investment and to set the course for growth? The inclusion of mezzanine capital is often”a way to the financial capacity of the company to obtain, to realize corporate visions, and to carry out targeted projects, such as expanding the production, knows Financing expert Dr. Werner of the prestigious law firm of Dr.
Werner & Collegen from Gottingen (www.eigenkapitalbeschaffung.de). Through the issuance of mezzaniner financial instruments in the ways of the private placement, the company can participate in private and institutional investors their company, without at the same time disclose ownership or rights. Liquidity flows to placement success immediately of the issuer; an order of collateral is not required”, explained Dr. Werner. Usual financing instruments of a mezzanine participation are, for example, profit participation certificates, dormant companies or bonds. The equity capital raised in this way is at the free disposal of the company, and can be used within the company in order to discretion of the company.
There is no collateral or private guarantees. What should meet requirements but now the company, to attract private investors to the capital market and is suitable for which companies raising capital through private placement? Basically can raise company in any form of equity. The capital market is reserved for not only the large and well-known listed companies, but is also the small and medium-sized family companies available, which have significantly reduced capital requirements. They can raise for example by the response and participation by private investors, Mezzanine Fund, or even customers, suppliers and employees ausserborschlich capital, which is required to carry out necessary investments”, explained Dr. Werner. But the company should a solid position on the market already can have and productive work in the operations. In a public offer to the mezzanine equity of about EUR 500.000,-the company must allow an investment prospectus by the Federal Agency for financial services supervision, should be created only through a specialized trade law firm. Straight ideal type, the acquisition can mezzanine Equity capital to finance growth be used, so in the cases where banks foreign capital would not release because the capital requirements of the company with low capital adequacy is too high for them. Through a private placement and the issue of participatory rights or silent partnerships also volumes in the double-digit million range are placeable depending on the company and create the necessary action and scope for the company. Where the absorption of foreign capital due to insufficient capital adequacy or otherwise fails, the necessary resources can be procured in this way to tap into new markets, to develop new products, or to build new production facilities. The acquisition of equity capital through a private placement (see) can so be a good financing alternative and give the company the freedom, which are required in order to realize meaningful investment bank-independent. In the family-owned company to stay on the sole Decision makers and the company is fully owned by the family.
