As the definition indicates, mezzanine capital has historically been understood to mean subordinated debt that resides between the senior debt and equity on the balance sheet, hence the name mezzanine, a word that evolved from the Latin for “in the middle”. Junior capital in comparison is a much broader term than mezzanine and encompasses subordinated debt as well as preferred and common equity.

The meaning of the term “non-sponsored transaction” has undergone much change over the years as the mezzanine market servicing such deals has evolved. Originally, a non-sponsored deal was simply a traditional mezzanine (i.e., subordinated debt) transaction lacking a buyout fund sponsor, but has expanded in scope to include transactions requiring multiple tranches of junior capital.