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

Authors: John M. Clark, Randy I. Anderson

Addresses: University of Southern Mississippi, USA. ' Baruch College, CUNY, USA

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.

DOI: 10.1504/GBER.2003.006200

Global Business and Economics Review, 2003 Vol.5 No.1, pp.100 - 110

Published online: 07 Feb 2005 *

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