A mezzanine investment generally refers to an investment in a company structured in the company's capital structure between senior debt and common equity. A mezzanine investment typically consists of an unsecured debt or debt-like instrument with an equity kicker (such as a warrant) (see Practice Note, Mezzanine Finance: Overview). It can also come in the form of a stand-alone equity investment, typically preferred stock, convertible securities (such as a convertible bond), or high-yield style debt. Because mezzanine capital tends to be subordinated to other creditors of the company and because mezzanine investments are often not as liquid as more traditional types of investments, mezzanine investors receive a higher return than providers of bank loans, high-yield bonds, and other more traditional forms of debt financing.

Mezzanine investments are used for a variety purposes, such as: