Convertible Securities. Convertible securities are fixed income securities that allow holders to convert the securities into a specified number of shares of the issuing company's common stock.
The two major types of convertible securities are convertible bonds and convertible preferred stocks. Why does a company issue a convertible stock? It gives them the opportunity to borrow money at a much lower interest rate. Why? Because they're giving the bondholders the opportunity to benefit should the stock price go up. Several years ago, when Amazon was a new company, they issued convertible bonds. Conversion Privilege: the defined state of the conversion feature on convertible securities Conversion Period: the period during which a convertible issue can be converted Conversion Ratio: the number of shares of stock into which a convertible issue will get converted Conversion Price: the stated price per share at which common stock will be delivered to the investor in exchange for a convertible issue.
Convertible Equity - An Alternative to Convertible Debt. A bridge loan between equity and debt is known as a convertible note.
At first glance, a bridge loan might seem like an amazing loan possibility that surmounts the odds of debt funding as it must not comply with the requisite of certainty. Who are the daring lenders of convertible equity? They are investors like us, Eurasian Capital, LLC. We love convertible equity! This is a great way to manage the uncertainty and costs to estimate a company valuation. This doesn't mean that a convertible note eliminates the risk or the due diligence process. More on Convertible Notes Convertible notes provide the agreement that defines the amount of capital provided to the company, the interest rate, and three new concepts - cap valuation, discount/warrants, conversion. Valuation cap refers to the maximum valuation that is accepted by both the fund-seeker and the supplier.
Discounts or Warrants The sum of the discount is usually negotiable, but a good rule of thumb is usually 20% - 25% per year. Summary. Convertible Preferred Stock. Should Businesses Turn to Convertible Preferred Stocks in Raising Their Capital?
When you are thinking of expanding your business, your first concern is how to secure the funding you need to turn that vision into reality. There are many ways to raise your capital and one of this is by using convertible preferred stock offerings. A convertible preferred stock refers to a type of preferred stock that allows the holder to turn shares into common shares but on a fixed number. Simply put, it is like a stock that acts like a bond. Business Financing. Small Cap Investing & Stocks Firm. Many investors focus on large-cap stocks, which are loosely defined as stocks with above $10 billion of market capitalization.
While this strategy works for most investors, it has the effect of artificially narrowing your investment universe. Moreover, the rise of online brokers, passive index funds, and other investment products have made it easier than ever to capture the benefits of small-cap investing. Eurasian Capital, LLC acts in an agency capacity to procure institutional capital for emerging micro-cap and small-cap companies, and we'd like to tell you why you should invest in small-cap stocks.
Private Placement Financing. Everything you Need to Know About Private Placement Financing Are you an entrepreneur who dreams to grow his business successfully?
Do you need trusted experts to examine your private equities and revenues? Investor Relations. What are investor relations?
The best way to explain this field is to think of a CEO of a publicly traded corporation. The CEO is at the top of the corporate pyramid and is completely responsible for running the entire company. To make it more recognizable, let's use a company everyone knows - Apple. The current CEO of Apple is Tim Cook. Believe it or not, Tim Cook, just like most students, gets a report card. However, if investors don't have faith in the CEO to increase the value of the firm or believe that the CEO is taking the company in the wrong direction, it is likely that the stock price will decrease. Convertible Securities. Convertible Equity - An Alternative to Convertible Debt.
Convertible Debt Financing. Let's talk about convertible debt financing for an emerging technology company. These transactions are common for technology companies. Usually, they come into play as part of a first external round of financing from investors, in-between priced rounds for a company, and just prior to a strategic or sales transaction for the company. Our focus will be on the term sheet for the convertible debt financing. Convertible Debt & Bonds. At Eurasian Capital, LLC, we encounter a lot of confusion over selling preferred equity versus convertible debt, and we've recently seen an upswing in the number of deals that are raising convertible debt - to the point that over 50% of the deals that we see are through a debt investment vehicle.
Before we dive into the differences between equity and convertible debt, let's first define each of these terms. Bridge & Commercial Bridge Loans. Bridge financing is a term that gets thrown around a lot.
Traditionally, bridge financing means that you're trying to bridge two events and need some capital for it. Bridge financing, often in the form of bridge loans, tends to be expensive. These loans are meant to help with a very short-term need, and bridge loans normally require a very well-defined plan. You get the financing for a specific reason, and you pay the interest or fees for it; then you get out. Overall, the entire process is very simple and straight-forward. Bridge Financing Company. If you are in the position of upgrading or downsizing your business real estate, infrastructure, equipment, or other assets, it is sometimes easier to find a new property before you sell your existing property. But how do you go about doing this? After all, you may not have the money to make the upgrade or downgrade you want. Expansion Financing, Recapitalization Financing. Institutional Sponsorship As one of a multitude of publicly traded companies, you know that stock is as valuable as key personnel or great ideas.
However, a firm's stock often remains hidden or overlooked by either buy-side or sell-side market as well as financial analysts. It is our mission to bring your enterprise before the proper institutional audience, while at the same time bracketing out any market vagaries that might hinder raising capital, commencing acquisitions, or increasing visibility. Most of our deal flow is found in the micro-cap/small-cap sectors, which tend to be undercapitalized and show low performance in liquidity and volume when trading. They are not closely followed by the professional investment community and almost always, there is very limited sell-side analytical coverage and retail market-making support. To bring a client into the spotlight, we introduce company representatives to both sell-side and buy-side analysts.
Commercial Financing, Private Equity Capital. We provide commercial financing so owners and managers can continue to lead their enterprises and participate in the rewards of future growth, while at the same time achieving the liquidity to diversify their personal holdings and fund the next round of company expansion.
We assist clients with building value by working with professional managers and entrepreneurs to achieve liquidity, implement operating improvements for the business, and realize short-term and long-term strategic financial goals. Our objective is to provide or arrange for liquidity and private equity capital for managers and owners of companies with revenues of $1,000,000 or more. We also review smaller capitalized companies and view the underlying merit of each transaction on a case-by-case basis. Raising Capital, Financial Network. Eurasian Capital, LLC. Convertible Debt Financing. Convertible Preferred Stock. Business Financing. Small Cap Investing & Stocks Firm.
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