In certain situations, the optimal solution for obtaining external capital may lie in a hybrid approach that combines elements of both debt and equity. Structured equity serves as a versatile financing option that occupies a position in the company's capital stack, incorporating features from both debt and equity instruments. This can take the form of equity-linked debt, such as a convertible note, or a form of debt that includes attached warrants. Alternatively, it can involve senior equity, such as preferred stock, which provides investors with a guaranteed return through a coupon while also offering the potential to convert to common stock and realize equity returns upon a future sale event.
At KROST, our team possesses extensive experience in identifying structured equity providers, negotiating favorable terms, and overseeing the entire process from initiation to completion.