tailieunhanh - Lecture Fundamentals of corporate finance (3/e): Chapter 15 - Robert Parrino, David S. Kidwell, Thomas Bates

Chapter 15, how firms raise capital. After studying this chapter you will be able to: How securities are sold to the public and the role of investment banks in the process; initial public offerings and some of the costs of going public; how rights are issued to existing shareholders and how to value those rights. | Fundamentals of Corporate Finance, 3/e Robert Parrino, . David S. Kidwell, . Thomas W. Bates, . 1 Copyright© 2015 John Wiley & Sons, Inc. Chapter 15: How Firms Raise Capital Learning Objectives Explain what is meant by bootstrapping when raising seed financing and why bootstrapping is important Describe the role of venture capitalists in the economy and discuss how they reduce their risk when investing in start-up businesses Discuss the advantages and disadvantages of going public and compute the net proceeds from an IPO Explain why, when underwriting new security offerings, investment bankers prefer that the securities be underpriced; compute the total cost of an IPO Copyright© 2015 John Wiley & Sons, Inc. 3 Learning Objectives Discuss the costs of bringing a general cash offer to market Explain why a firm that has access to the public markets might elect to raise money through a private placement Review some advantages of borrowing from a commercial bank rather than selling securities in financial markets and discuss bank term loans Copyright© 2015 John Wiley & Sons, Inc. 4 Bootstrapping How new businesses get started Most businesses are started by an entrepreneur who has a vision for a new business or product and a passionate belief in the concept’s viability The entrepreneur often fleshes out his or her ideas and makes them operational through informal discussions with people whom the entrepreneur respects and trusts, such as friends and early investors Initial Funding of the Firm The process by which many entrepreneurs raise “seed” money and obtain other resources necessary to start their businesses is often called bootstrapping The initial “seed” money usually comes from the entrepreneur or other founders Other cash may come from personal savings, the sale of assets such as cars and boats, loans from family members and friends, and loans secured from credit cards The seed money, in most cases, is spent on developing a prototype of the product or | Fundamentals of Corporate Finance, 3/e Robert Parrino, . David S. Kidwell, . Thomas W. Bates, . 1 Copyright© 2015 John Wiley & Sons, Inc. Chapter 15: How Firms Raise Capital Learning Objectives Explain what is meant by bootstrapping when raising seed financing and why bootstrapping is important Describe the role of venture capitalists in the economy and discuss how they reduce their risk when investing in start-up businesses Discuss the advantages and disadvantages of going public and compute the net proceeds from an IPO Explain why, when underwriting new security offerings, investment bankers prefer that the securities be underpriced; compute the total cost of an IPO Copyright© 2015 John Wiley & Sons, Inc. 3 Learning Objectives Discuss the costs of bringing a general cash offer to market Explain why a firm that has access to the public markets might elect to raise money through a private placement Review some advantages of borrowing from a commercial bank rather than .