Mezzanine raise: the room for subordinated lenders
Mezzanine capital sits between senior debt and equity and is priced for that risk. Mezzanine lenders read the same business or property files as the senior lender plus the senior loan terms, the intercreditor agreement and the equity upside they are offered.
Folder index
- 01 Transaction overview Purpose, capital stack, sources and uses.
- 02 Business or property Core diligence files, financials or rent roll.
- 03 Forecast Base and downside cases with coverage at each level of the stack.
- 04 Senior debt Senior term sheet or loan agreement.
- 05 Intercreditor Draft intercreditor or subordination agreement.
- 06 Equity Sponsor equity commitment, ownership structure, pledge collateral.
- 07 Valuation Appraisal or valuation work.
How this raise works
Companies use mezzanine debt to fund buyouts, acquisitions, growth or recapitalizations without giving up as much equity. Property sponsors use it to fill the gap between the senior mortgage and their equity. Providers include mezzanine funds, private credit funds, insurance companies and family offices.
Because they are paid after the senior lender, mezzanine lenders focus on value coverage and their rights in a default. In corporate deals that means subordination and standstill terms. In real estate the mezzanine loan is commonly secured by a pledge of equity in the property-owning entity, and the intercreditor agreement sets cure and purchase rights.
Pricing combines cash interest, payment-in-kind interest, fees and sometimes warrants or a profit share. The room should help the lender test the downside, because that is where its return is at risk.
Best data rooms for this raise
The 16 rooms re-ranked with this raise's weights. Permission control carries the most weight here.
- Investor tracking 22%
- Permission control 24%
- Raise workflow 24%
- Investor onboarding 15%
- Cost of a raise 16%
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Full deal room with AI, a listed price and a 14-day free trial.
Price $149 a month Trial 14-day free trial Features 8 of 12 listed -
Long-running M&A platform with layered permissions and fast support.
Price Priced on request Trial Free trial available Features 9 of 12 listed -
Bank-grade platform for large processes, with AI and a mobile app.
Price Priced on request Trial Demo on request Features 10 of 12 listed -
Deal room with AI and readiness tools for preparing a process.
Price Priced on request Trial Free trial available Features 8 of 12 listed -
One of the oldest deal rooms, common on bank-led transactions.
Price Priced on request Trial Demo on request Features 8 of 12 listed -
Simple flat-rate deal room with signing and Q&A.
Price $250 a month Trial Free trial available Features 8 of 12 listed -
Deal room with a listed monthly price and an open API.
Price $299 a month Trial Free trial available Features 7 of 12 listed -
Easy, reliable deal room favored by mid-market advisers.
Price Priced on request Trial Free trial available Features 7 of 12 listed -
European deal room strong in real estate, with AI features.
Price Priced on request Trial Demo on request Features 8 of 12 listed -
Content cloud with watermarks and signing, priced per user.
Price $15 a user a month Trial Free trial available Features 9 of 12 listed
Places 11 to 16: DealRoom (7.0), SmartRoom (7.0), ShareVault (6.8), Venue by DFIN (6.4), Digify (6.1), DocSend (5.8)
Folder index for the room
A starting index for this raise. Number the folders so the order survives exports and investors can cite them in questions.
- 01 Transaction overviewPurpose, capital stack, sources and uses.
- 02 Business or propertyCore diligence files, financials or rent roll.
- 03 ForecastBase and downside cases with coverage at each level of the stack.
- 04 Senior debtSenior term sheet or loan agreement.
- 05 IntercreditorDraft intercreditor or subordination agreement.
- 06 EquitySponsor equity commitment, ownership structure, pledge collateral.
- 07 ValuationAppraisal or valuation work.
- 08 LegalOrganizational documents, liens, litigation.
- 09 Mezzanine proposalsTerm sheets per provider, private folders.
- 10 Q&AQuestions and answers.
Features this raise needs
| Feature | Why | Ellty | iDeals | Datasite | Ansarada | Intralinks | SecureDocs |
|---|---|---|---|---|---|---|---|
| Q&A module | LPs and lead investors post questions on a file; the deal team routes each one, drafts a reply and decides who sees it. | ||||||
| Investor activity log | A per-investor record of opens, pages and minutes, which tells the IR team who is in diligence and who stalled. | ||||||
| Dynamic watermarks | Stamps the reader and a timestamp over every page, so a PPM that leaks carries its source with it. | ||||||
| Built-in redaction | Masks fee splits, investor names or personal data in place, with no edited duplicate to keep in sync. |
Setting up the room
- 01
Settle the senior terms first
Mezzanine lenders price off the senior loan. Share the senior term sheet early.
- 02
Show coverage by layer
Present value and cash flow coverage for senior and mezzanine debt in the downside case.
- 03
Draft the intercreditor early
Intercreditor talks take time. Put the draft in the room as soon as both lenders are chosen.
- 04
Keep proposals separate
Each provider's term sheet stays in its own folder.
- 05
Track both lenders' questions
Use one Q&A log with permissions so senior and mezzanine answers stay consistent.
Common mistakes
- Comparing mezzanine offers on cash rate and ignoring PIK, fees and warrants.
- Starting intercreditor talks at the end.
- Forecasts that show coverage only in the base case.
Calculators for this raise
Or take the four-question quiz and check the raise checklist.
Questions and answers
How is real estate mezzanine secured?
Commonly by a pledge of the equity in the entity that owns the property, rather than a mortgage on the property itself.
Who provides mezzanine debt?
Mezzanine and private credit funds, insurance companies, family offices and some specialist lenders.
Is mezzanine the same as preferred equity?
No. Preferred equity is an equity interest with priority returns. The economics can be similar, but the rights and remedies differ.