Lecture 6- Raising capital

Private equity is general term that describes all kinds of that money from number of in order to amass amounts of money. They’re then used to acquire in companies

Non-venture part of private equity is often associated with looking for mature, generating companies in need of some (associated with companies)

Private equity mainly comes from investors & investors, who can dedicate sums of money for time periods

Private placement- sale of securities to number of

Venture capital is like sub section of but often goes into companies, generally with level of risk. Venture capitalists make by finding good deals in businesses. They offer to set amount of money for in company

Venture capitalists may want in how company is . Also, they may own of business, but compared to firms they rarely buy company

Suppliers of venture capital include: old-line families, private & (who provide funds), large or corporations (who have established venture capital ) & (investors that act as when providing financing who are not part of or )

First stage of private equity financing is . amount of financing needed to prove or develop & is normally not included in this stage

Second stage of private equity financing is . for firms that started within & are likely to pay for marketing & product expenditure

Third stage of private equity financing is . money is contributed to business to begin & after firm has spent its start-up

Fourth stage of private equity financing is . Funds are earmarked to enable it to reach its & achieve

Fifth stage of private equity financing is . for company to buy out other in firm

Sixth stage of private equity financing is . Money provided for & outside to acquire full functioning

First step in public offering is (several before issue). An initial indicative is released that presents offering

Second step in public offering is (about before full prospectus is issued). Amount of money to be & type of to be issued are discussed. expressions of interest collected & issue price is . & approved will be appointed

Third step in public offering is (several before offering takes place). contains all relevant & information

Fourth step in public offering is & (shortly after of registration period). In typical firm commitment contract buys specified amount of from firm & sells it at price. assists in sale

Fifth step in public offering is (usually within of offering). stands ready to place to buy at price on market

Alternative public issue methods are (issue of offered for sale to general on basis), (public issue of in which securities are offered to ), (company’s first equity issue made to ) & (new equity issue of by company that has previously issues securities to public)

Three services that underwriters perform for corporate issuers are method used to securities, new securities & new securities

Underwriter- firms that act as between company securities & public

As underwriting involves , underwriters combine to form underwriting group called '' to share & help issues

One method of underwriting is . buys entire issue for than offering price & accepts of not being able to sell them. Difference between underwriter’s price & price is called or

Another method of underwriting is . acts as agent, receiving commission for each sold. sells as much of issue as possible, but can return shares to issuer without responsibility

Third method of underwriting is . does not set fixed price for shares to be . Instead conducts auction in which bid for shares. Offer price is determined based on submitted

Firm commitments are riskier for as they don’t know they will sell. However, best efforts are riskier for as will be returned back to them

Aftermarket- Period after is initially to public

Many underwriting contracts contain . This is contract provision giving option to purchase shares from issuer at price. Also it is called

Almost all underwriting contracts contain . This is part of underwriting contract that how long must wait after an before they can equity

Quiet period- Period following during which many authorities place on public communications of

Determining correct is most difficult thing an underwriter must do for . If offer price is too high, issue & have to be . If offer price is too low, firm as much as it could. There must be some level of to investors to buy

Underpricing exists because it helps ensure success of , rewards for purchasing securities, addresses issue of '' & rewards for information they provide to regarding potential interest in & value of security issue

Following announcement of new equity issue, share prices generally . Reasons for this are , &

Costs of new issues are (consists of paid by to underwriting ), (incurred by such as fees, fees & ), (costs not reported on prospectus such as management time spent working on new issue), , &

RIghts issue- Only for shareholders. Normally firms must sell to shareholders before going to . Shareholders have option to buy number of new shares from firm at price within time. Advantages of rights issue are that it appears to be for issuing firm than cash offers. Also, firm can do rights issue without using whereas for cash offer need to be used

Shareholder choices in rights issue are (buy number of shares at price within timeframe that company has given them), (these are tradable), to raise financing to buy remainder (exercise part of & other part of right is ) or (let rights )

Subscription price- Price that shareholders are allowed to for of equity. It is declared when is declared

Dilution- in existing shareholders’ in terms of , value, value or

One way of issuing long-term debt is . These form part of debt financing. There are two types & they are ( between bank & firm to up to certain point) & ( that requires bank to lend up to prespecified loan amount at prespecified interest rate)

Two types of loan commitment include: (loan commitment in which flow back & forth between & without any predetermined schedule up to amount that loan commitment is upon) & (loan commitment where cannot pay down & then subsequently amount of borrowing)

Another way of issuing long-term debt is of

Two forms of direct private long-term financing include: (direct business which have maturities between to years) & ( provided directly by limited number of which are similar to loans but maturity is )