Although mezzanine financing generally does not require immediate equity concessions, many agreements allow the lender to convert debt into equity or receive warrants. This can result in eventual ownership dilution for the original equity holders if the company performs well and the lender exercises their conversion options.Although mezzanine financing generally does not require immediate equity concessions, many agreements allow the lender to convert debt into equity or receive warrants. This can result in eventual ownership dilution for the original equity holders if the company performs well and the lender exercises their conversion options.