Definition of warrants

Definition

Warrants are another kind of option to purchase stock, generally used in investment transactions (for example, in a convertible note offering, investors may also get a warrant, or a law firm may ask for one in exchange for vendor financing). They differ from stock options in that they are more abbreviated and stand-alone legal documents, not granted pursuant to a single legal agreement (typically called a β€œplan”) for all employees.

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Employees and advisors may not encounter warrants, but it’s worth knowing they exist.