Third
Stage
Funds are
provided for the major expansion of a company which has increasing sales
volume and which is breaking even or which has achieved initial
profitability. Funds are utilized for further plant expansion, marketing, and working capital
or for development of an improved product, a new technology,
or an expanded product line.
Bridge Financing
(also Later Stage or Expansion
Stage)
The firm is
mature
and
profitable, and often still expanding. Financing is provided for a
company expected to "go public" within six months to a year.
Often bridge financing is structured so that it can be repaid from the
proceeds of a public offering. Bridge financing also can involve
restructuring of major stockholder positions through secondary
transactions. This is done if there are early investors who want to
reduce or liquidate their positions. This also might be done following a
management change so that the ownership of former management (and
relatives or associates) can be purchased prior to the company's going
public.
