Mezzanine investing usually takes the form of a subordinated loan and an equity piece, such as warrants or preferred stock. Several trends have converged in the last few years which have diminished the flow of high- quality transactions to mezzanine investors. These changes in financial markets have made it more difficult to achieve targeted returns and have increased the risk of mezzanine investing.

The first trend is one that is well known and is common to capital markets of many types: there is too much money chasing too few deals.

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