Equity Kicker
An equity kicker gives lenders an option to receive additional returns in the form of equity, often as part of a debt financing deal. Equity kickers are used to sweeten the terms for lenders, giving them a stake in the company’s future upside. They are commonly structured as warrants or options and are typically used in real estate and private equity transactions to align incentives between borrowers and lenders.
Key Takeaways
- Offers lenders additional returns through equity participation.
- Commonly structured as warrants or options.
- Used in private equity and real estate deals.
- Aligns incentives between borrowers and lenders.
