Are you looking to take your company public or offer up shares of ownership in your business at some point in the future? Perhaps you are doing this because bringing in outside investors will help you get the working capital you need to boost your operations and hopefully, your company's growth. One option to look into would be to offer a warrant check to a potential investor that will allow the investor to purchase stock in your company at a set price at some point in the future. Here's how stock warrants work and why issuing warrant checks might be the right move for your growing business.
A Stock Warrant Allows the Owner to Buy Shares at a Set Price Even If the Price Changes in the Future
If you value your company at ten dollars per share and issue stock warrants at that price, you will get an infusion of much-needed money from your investors in exchange for the check. Then, if the value of your company goes up to 20 dollars per share in the future, the investor can use their warrant check to buy stock at 10 dollars per share and make an immediate profit on their investment. Stock warrants allow potential investors to bet on your company's future success.
Stock Warrants Have an Expiration Date Which Will Motivate the Company to Grow the Business Quickly
If you want to keep your investors happy and get them to continue reinvesting in your company, giving them a nice profit on their stock warrants before the expiration date is a great way to build a long-term relationship. If you know a group of warrants is set to expire next year or next quarter, your company will be motivated to perform in order to allow your investors to make as much of a profit as possible. That profit then becomes money that some investors may choose to turn around and reinvest in your company again, leading to more working capital for even more growth.
Stock Warrants Do Have Risks But an Expert Can Help You Navigate the Road Head
The obvious possible downside to a stock warrant is if the value of your company goes down over time, which means the investor with the warrant would have to sell at a loss instead of at a profit by the expiration date. But reach out to an expert in stock warrants and warrant checks and you can take a look at your business, and your expected future growth and come up with a set of terms and expiration dates that will improve the odds of success for all involved.
For more information on a warrant check, contact a professional near you.