Warrant

A warrant is the security granting the holder the right to purchase shares at a fixed exercise price for a defined period. Similar in mechanics to a stock option but issued to non-employees (banks, lenders, strategic partners, advisors), warrants typically run 5-10 years and are commonly attached to venture debt deals, strategic partnership agreements, and bank facilities. It is the structural analog of a stock option for non-employee parties and a frequent component of late-stage financing structures.

The warrant mechanic:

• Grant: company issues warrant to the holder, specifying share count, exercise price, expiration date, and any other terms (cashless exercise rights, transferability, etc.).
• Exercise: during the warrant's term, t...