what is mezzanine financing 
mezzanine financing is a hybrid of debt and equity financing that gives a lender the right to convert debt to an equity interest in a company in case of default generally after venture capital companies and other senior lenders are paid in terms of risk it exists between senior debt and equity mezzanine debt has embedded equity instruments often known as warrants attached they increase the value of the subordinated debt and allow greater flexibility when dealing with bondholders mezzanine financing is frequently associated with acquisitions and buyouts for which it may be used to prioritize new owners ahead of existing owners in case of bankruptcy 