Equitybacked
Equitybacked refers to financing or investments that are supported by an ownership stake in a company or asset. It denotes arrangements in which equity rights or the option to acquire equity underlie the capital provided, or where a debt instrument has an equity-related component. Equitybacked structures can involve direct equity investments, convertible instruments, or loans that include equity features.
Common forms of equitybacked arrangements include convertible debt, where a loan can be converted into equity
In corporate finance, equity-backed funding enables growth capital, acquisitions, or refinancing by bringing in outside investors
Key considerations include dilution of existing shareholders, valuation challenges, and the complexity of terms in investor