Demystifying Warrants – How & Why are they Used in ESOP Transactions?

ESOP transactions often employ warrants which are used to provide an enhanced return to investors or debt holders who provide a portion of the ESOP company’s debt capital. A warrant is a financial instrument that gives the holder a right to purchase issuer stock at a specified price at a future date or during a future period. Warrants are identical in financial structure and effect to stock options (in fact, a warrant is a form of stock option), and the term warrant applies to an option granted to a holder by an issuer to purchase another issuer security, like common stock, preferred stock, notes, or bonds.

Presented by James G. Steiker, Chairman & CEO – SES ESOP Strategies.