Gypsy Swap

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DEFINITION of 'Gypsy Swap'

A method in which a company may raise capital without issuing additional debt or holding a secondary public offering. Gypsy swaps consist of multiple transactions, with the ultimate result being an increase in capital for the business. By convincing existing shareholders to trade in common shares for restricted shares, the business can then sell the common shares to new investors, thus increasing capital.

INVESTOPEDIA EXPLAINS 'Gypsy Swap'

While gypsy swaps appear to be a roundabout way of creating capital, the act typically results in the company having to sweeten the pot for both new and existing shareholders in order to accept the terms of the deal. In most cases, gypsy swaps are last-ditch efforts to avoid cash constraints or bank covenants by engaging in some "creative" capital raising.

RELATED TERMS
  1. Treasury Stock (Treasury Shares)

    The portion of shares that a company keeps in their own treasury. ...
  2. Restricted Stock

    Insider holdings that are under some other kind of sales restriction. ...
  3. Shareholder

    Any person, company or other institution that owns at least one ...
  4. Insider

    A director or senior officer of a company, as well as any person ...
  5. Common Stock

    A security that represents ownership in a corporation. Holders ...
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RELATED FAQS
  1. What is a "gypsy swap"?

    A gypsy swap is a unique method by which a company may raise capital without issuing debt or holding a secondary offering. ...
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