Mezzanine finance is borrowing that sits behind the senior lender, filling the gap between what the senior debt covers and what the deal needs. It costs more because it carries more risk. Unitranche combines senior and junior debt in a single loan from one lender.
Mezzanine
- Ranks behind senior debt, so it's repaid after the senior lender if things go wrong.
- Fills the funding gap above what the business's assets or profits support at senior level.
- Is priced for risk, so it's more expensive than senior debt.
Unitranche
- One loan, one lender, blending senior and junior debt.
- Simpler to arrange than separate senior and mezzanine facilities, usually at a blended price.
When they're used
Usually on larger deals, where senior debt and vendor finance together don't cover the price. On smaller deals, more vendor finance or a bigger contribution is often the cheaper way to close the gap.
Is it right for your deal?
Extra debt means extra repayments from the business's cash flow. We'll show you whether a mezzanine layer helps or just adds cost. See How is buying a business usually funded? The capital stack.
Last reviewed: 8 October 2026