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praise for The Handbook of Financing Growth
"Provides an exceptional primer for anyone seeking to understand how to finance a growing organization . . . useful for the entrepreneur, student, or financial professional. Delineates the many sources a growing company can tap to obtain financing—and shows the reader in clear, concise language how to go about it. One of the best books on the subject of finance I have read."
—Barry D. Yelton, Senior Vice President, Business Alliance Capital Corp.
"A tremendous tool for creatively growing your company. This book covers the waterfront of financing options and makes sure the business owner knows how to get a deal done and do battle with any bank or private equity investor to get the best terms."
—Rick Rickertsen, Managing Partner, Pine Creek Partners and author of Buyout: The Insider's Guide to Buying Your Own Company
"Wow! This is the book I needed a few years ago when searching for funding options for my own company. The authors have covered everything here: all types of debt and equity funding, plus the process to follow to find the right funding source for your company's circumstances. This handbook should be on every entrepreneur's bookshelf !"
—Peter Pflasterer, entrepreneur, founder, JPS Communications
"An excellent resource and must-have for anyone looking into how they should capitalize their company. It not only provides the basics of how to get a financing plan in place, but also goes a step further by explaining how companies get funded in the real world. No single resource has been able to bridge the gap between emerging growth and middle-market companies being overlooked by investment banks until now. Marks et al. have encapsulated a lifetime of financing knowledge in a single text. I recommend it to any middle-market company seeking capital."
— Christopher W. Gaertner, CFA, Managing Director, Head of Global Software Investment Banking, Global Technology Group, Lehman Brothers
"Having known the authors personally for many years, I couldn't think of a better collection of people with practical knowledge of how to finance a company. Since every growth company is in a constant search for capital, every one of them ought to own this book."
—Mitch Mumma, Managing General Partner, Intersouth Partners
For emphasis, we want to point out that there is no silver bullet in funding a company. As much as we would like you to believe that every fund-raising follows the same consistent process, it is just not true. However, what we will do is provide a view that is fairly representative of the key steps that need to be considered and how to navigate the process. In practice you will find that some steps are conducted concurrently with others, and some steps are conducted rather informally. What we have attempted to do is explicitly show the key steps and provide guidance for each. With that said, Figure 1.1 provides an overview of the financing process from the perspective of the issuer and is comprehensive in that it indicates the steps for raising equity; debt placement will be a subset of this process depending on the transaction type. In many instances you will see the word investor used interchangeably for either an actual investor or a lender; the line of distinction blurs depending on the characteristics of the deal. We have chosen to segment the process into the following categories for discussion. You'll note that this is also the organization of Part One of this handbook.
* Business Performance and Strategy.
* Capital Structure.
* Sources of Capital.
* Equity and Debt Financings.
* Expert Support.
* Closingthe Deal.
Steps 1 through 3 allow us to obtain a view of the current business and management's plans. In step 1 we review the business plan, strategic initiatives, and shareholder goals and objectives. Step 2 is an analytical review of the current financial position of the company. In step 3 we seek to understand the forecasted performance of the company and the underlying assumptions. Combined, we should be able to define and understand:
* The financial position of the company.
* The structure of the current balance sheet.
* The specific use of funds.
* What industry the company operates in.
* The stage of the company.
* The shareholder objectives.
* Management's strengths and weaknesses.
* Management's plans and view of the future.
In many instances shareholder objectives are not well articulated and need clarification, particularly as they relate to funding the business. Given that the focus of this book is start-up through middle-market (revenues up to $500 million) companies, many shareholders are also senior managers of the company. Typical objectives include: (1) addressing personal risk management issues while growing the business and (2) shareholder liquidity. These two topics have significant impact in answering the classic questions "What is the right mix of debt and equity?" and "How do I avoid personally guaranteeing the company's debt?" It is critical to understand these issues early in the process.
Steps 4 through 6 focus on comparing the company to its peers and determining variances. Once base information is collected regarding the industry, the stage is set for a discussion with management about the realism and ranges of potential outcomes, and why they may vary compared to other similar businesses. This discussion should result in the ability to analyze multiple scenarios and determine the variability (risk) in achieving management's forecast. In step 7 we update the assumptions and agree on the financial forecast that we will use in the fund-raising process.
Step 8 helps to determine a range of valuations for the business as an entity. This is critical in bringing alignment of expectations among shareholders, directors, management, and supporting advisers.
In step 9, we assimilate all of the prior steps into a target capital structure and some fallback scenarios. In steps 10 through 12 we test the market as a reality check and determine the likelihood for success given our chosen strategy. The company is looking for an indication of interest on the part of potential investors/lenders. This may be an iterative process, the downside being the risk of the market perceiving that you are shopping the company. There is a careful balance of having alternative sources versus overexposing the company to potential investors/lenders. If this happens, you may not be taken seriously or may be taken seriously by only the less than optimal sources. In Chapter 7 we address the use of experts in the financing process. They can be invaluable in testing the market and potential alternatives, as well as providing an added perspective.
Once the financing strategy has been solidified and initially tested, a so-called book is created to present the company and solicit formal responses; these are steps 13 and 14. In the event that the funding required is solely debt, and depending on the type of debt, an abbreviated amount of information will be required from a traditional book and then some additional financial detail will be added.
Steps 15 through 17 focus on management's presentation of the company during the financing process. Steps 18 through 22, addressed in Chapter 8, are about negotiating, closing the deal, and managing ongoing investor/lender relationships.
Excerpted from The Handbook of Financing Growth by Kenneth H. Marks Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
|Pt. 1||The financing process||1|
|Ch. 2||Business performance and strategy||6|
|Ch. 4||Capital structure||22|
|Ch. 5||Sources of capital and what to expect||44|
|Ch. 6||Equity and debt financings : documentation and regulatory compliance with securities laws||161|
|Ch. 7||Expert support - the players and their roles||262|
|Ch. 8||Closing the deal||279|
|Pt. 2||Case studies||287|
|Pt. 3||Financing source directory||329|
|App. A||Corporate finance primer||377|
|App. B||Financial statements||404|
|App. C||Discount rates||415|
|App. D||How fast can your company afford to grow?||417|
|App. E||Notes about start-ups||433|
Posted April 21, 2005
The book comes with access to its online funding sources database...with search features based on your criteria. The database includes over 400 firms that provide a variety of debt and equity financing for emerging growth and middle-market companies.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.