Equity Kickers In effect, a kicker is an extra incentive to encourage investors to purchase debt securities, such as a bond or preferred share. When a bond has an embedded option that may be exercised by the bondholder to purchase equity at the issuing firm at a discount price, the option is said to be a kicker.
What is a kicker in negotiation?
Kicker: A special incentive provided for specific deal terms. These types of incentives highlight a rep's' autonomy and control over elements of negotiation. Kickers can be provided for multi-year deals, selling additional products or specific billing terms that are advantageous to the company.
What is an equity sweetener?
From Longman Business Dictionary ˌequity ˈsweetener when a company raises money by ISSUing debt, with the right for investors in the debt to exchange it at a later date for shares in the company, perhaps with a right to buy shares at a lower price than usualSYNEQUITY KICKER → sweetener.
What is a preferred equity investment?
Typically in a Preferred Equity investment, all cash flow or profits are paid back to the preferred investors (after all debt has been repaid) until they receive the agreed upon “preferred return,” for example, 12%. Remaining distributions of cash flow are returned to Common Equity holders.
What is a kicker in business terms?
What Is a Kicker? A kicker is a right, exercisable warrant, or other feature that is added to a debt instrument to make it more desirable to potential investors by giving the debt holder the potential option to purchase shares of the issuer.
What is an equity kicker and how does it serve the interests of a venture capitalist?
An equity kicker is an equity incentive where the lender provides credit at a lower interest rate and, in exchange, gets an equity position in the borrower's company.
What is a sweetener in accounting?
A sweetener is a special feature added to a debt instrument, such as a bond or preferred stock, aimed at increasing its value in the markets. Two popular forms of sweeteners are warrants and rights, which allow the holder to either convert securities into stock at a later date or purchase shares at below-market prices.
What is a sweetener deal?
A sweetener is something that you give or offer someone in order to persuade them to accept an offer or business deal.
How option is used as a sweetener in derivative securities?
OTHER DERIVATIVE SECURITIES Warrants are essentially call options given by a company for their own stock, usually as "sweetener" along with a bond issue. When this occurs, the buyer of a bond with an attached warrant will receive the bond and a call option with an expiration date of several years or more.
What is mezzanine stock?
In finance, mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares. Mezzanine financings can be structured either as debt (typically an unsecured and subordinated note) or preferred stock.
What is a mezzanine structure?
A mezzanine is an intermediate floor (or floors) in a building which is open to the floor below. It is placed halfway up the wall on a floor which has a ceiling at least twice as high as a floor with minimum height. Mezzanines are commonly used in modern architecture, which places a heavy emphasis on light and space.
How does mezzanine finance work?
How does mezzanine finance work? Mezzanine finance is effectively a business loan where the debt becomes an equity share after a predetermined timeframe has passed. That means if the company can't pay back the funding, the lender gets a share of equity instead. In this way, equity in the business is used as security.