A security which gives the holder the right to purchase shares in a company at a pre-determined price. A warrant is a long term option, usually valid for several years or indefinitely. Typically, warrants are issued concurrently with preferred stocks or bonds in order to increase the appeal of the stocks or bonds to potential investors.
Warranties
Contractual statements made by a vendor in a sale and purchase agreement that amount to assurances about the state of a target company and, in particular, to the existence and level of any liabilities. Warranties tend to be more general than indemnities and are designed to capture liabilities that are not known about at completion.
Washout round
See Cram down round.
Weighted average anti-dilution
An anti-dilution protection mechanism whereby the conversion rate of preferred stock is adjusted in order to reduce an investor’s loss due to an increase in the number of shares in a company. Without anti-dilution protection, an investor would suffer from a reduction of his or her percentage ownership. Usually as a result of the implementation of a weighted average anti-dilution, company management and employees who own a fixed amount of common shares suffer significant dilution, but not as badly as in the case of a full ratchet.
Weighted average cost of capital (WACC)
The average of the cost of equity and the after-tax cost of debt. This average is determined using weight factors based on the ratio of equity to debt plus equity and the ratio of debt to debt plus equity.
Wipeout bridge
A short term financing that has onerous features whereby if the company does not secure additional long term financing within a certain time frame, the bridge investor gains ownership control of the company. See Bridge financing.
Wipeout round
See Washout round.
Write-down
A decrease in the reported value of an asset or a company.
Write-off
A decrease in the reported value of an asset or a company to zero.
Write-up
An increase in the reported value of an asset or a company.