Identifying the optimal capital structure for a second stage growth company using mezzanine financing

John Clark and Randy I. Anderson

Global Business and Economics Review, 2003, vol. 5, issue 1, 100-110

Abstract: This paper demonstrates how mezzanine financing can be used to minimise the weighted average cost of capital for a second stage growth firm waiting to obtain equity capital from an IPO. A model is provided that allows entrepreneurs to fit their available mezzanine financing cost structure to a continuous function to determine the appropriate amount of mezzanine financing for planning purposes.

Keywords: mezzanine financing; second stage growth firm; weighted average cost of capital; entrepreneurs; cost structure; initial public offerings; IPO. (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:5:y:2003:i:1:p:100-110

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