Mina Mar Group

Preferred stock, also know as preferred or preference shares is one of the main types of stock besides common shares. It is considered that preferred stock is a hybrid security that combines properties of debt (fixed dividends) and equity (potential to raise in price). They are distinct from common shares because they don't have voting rights but have higher claim on company's assets and earnings. Terms of preferred stock are described in issuing document; they can be issued under any set of terms that is compliant to laws and regulations. Preference in dividends is what distinguish preferred  from common stock. Board of directors makes decision whether or not company will pay dividends to its shareholders. Dividends are specified as percentage of the par value or as a fixed amount. Common shareholders can receive dividends only if preferred shareholders are already paid in full if board decides to pay them dividends in the first place. This makes them similar to bonds...

Mezzanine financing named for its place in the capital structure, is a hybrid of debt and equity financing. Lender gives you a loan and if everything works out the company simply pays to loan back under already fixed terms. The truth is that large percent of new businesses fail so lender has the right to convert their loan into an ownership percentage or equity interest. This allows lender to have a claim to any future profit and protect himself in case of default. On the other hand mezzanine capital enables owner to keep full ownership as long as business is lucrative. It can also be used to persuade reluctant investor who sees your venture as a high risk by offering him mezzanine arrangement. If business fails to pay the loan lender is generally paid after venture capital companies and senior lenders are paid. Mezzanine financing is also offered to business with established reputation and products and history of profitability where process is completed with little due dilige...