Expansion Financing is defined as capital used to enlarge the size of a corporation through a variety of means. Expansion financing can be used for internal growth through organic measures such as launch of new products or the acquisition of new customers. Expansion financing can also be used for external growth through execution of mergers and acquisition.In its most simple application, expansion financing is money used by a corporation to increase its working capital or productive capacity to facilitate growth. While not directly related to any one form of capital, expansion financing can be a loan, an equity investment of a combination thereof.

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.

Expansion Financing

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