bransonglobe.com LOCAL By Bob Hodgson, Investment Banker You are the envy of most of the population in this great country by being a Branson business owner. This is your baby. You have your blood, sweat and tears in this business. You have probably sacrificed personal relationships and have worked fourteen-hour days. This is your livelihood and your business has defined who you are. You now decide to take your Branson business to the next level and realize this will require creative financing. You determine that mezzanine financing may be a viable option for you to achieve your goals. Mezzanine capital is subordinated debt that resides between the senior debt and equity. Subordinated debt is debt that ranks after other debts should the company fall into liquidation or bankruptcy. The name mezzanine is a Latin word that evolved from “in the middle”. Mezzanine financing combines senior debt with some type of equity component, such as ty dilution. They are considered less expensive than straight equity financing. An investment banker is able to combine financing with equity. There are other creative options depending on the needs and resources of the client. It is recommended that mezBob Hodgson, Investment Banker. (Special to Branson Globe) warrants to purchase stock. It is used by growing middle market companies to raise capital for acquisitions, buyouts, expansions or liquidity events. The primary benefit of mezzanine securities is they fill the gap between what senior lenders are willing to provide and what equity the owners are willing to inject. Like senior debt, mezzanine securities are loans that earn interest and like equity, they are unsecured. The overall cost of mezzanine securities is higher than senior debt. This is because they minimize the owner’s equiKnights of Columbus host Red Cross blood drive Submitted to Branson Globe Knights of Columbus will host an American Red Cross blood drive on Friday, May 29, from noon until 5 p.m. in the parish center of Our Lady of the Lake Catholic Church, 202 Vaughn Drive, Branson. All required health and safety precautions will be followed. Donors are asked to wear a mask. Temperatures will be taken at the door. There is a critical shortage of all blood types and blood products. You are eligible to donate blood if you are 18 years old, weigh at least 118 pounds, are in good health, and have a valid photo ID and/or Red Cross card. Appointments are recommended to minimize wait time. Walk-ins are welcome. Future drives are scheduled for July 24 and September 25. For more information, contact Michael Donati at 573-4650263, mdonati@suddenlink. net; or Ed Johnsonbaugh at 417-337-0785, edward.johnsonbaugh@gmail.com. To learn more about the America Red Cross, visit redcrossblood.org. zanine debt should not be more than double the cash flow of the company. Mezzanine loans have high interest rates and are risky. The lender may ask for warrants or options of ownership should the borrower default. A company must demonstrate a track record with an established reputation and a history of profitability in order to attract a mezzanine lender. This article will be continued next week with an example of mezzanine financing. Amvest Financial Group is a leading international investment banking firm based in Kansas City representing clients with May 17-19, 2020 • 7 Investment Banking: Exploring mezzanine financing, part 1 sales from $10 million to over $6 billion. www.amvest.com.
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