Equity Kicker
Private Equity glossary · Private Equity Fundamentals
Definition
Warrant or option attached to a debt instrument providing upside participation.
Equity Kicker in plain English
When a company borrows money, the lender normally just wants their loan repaid with interest — steady but boring. An equity kicker is a bonus sweetener bolted onto that loan: it gives the lender the right to also grab a slice of ownership (through a warrant, which is basically a coupon to buy shares cheaply later) if the company does really well. So the lender gets safe interest AND a lottery ticket on the upside. It's the deal you'd cut with a friend: 'I'll lend you the money for your food truck, but if it becomes a hit, I get to buy in for a piece of the profits too.'
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