Evaluating The Option Financing Alternatives Accessible

This company, a retail clothing store with three suburban locations in Atlanta, Georgia, is incorporated, with each of the three Boudoir sisters owning one-third of the outstanding stock. The company is profitable, but rapid growth has put it under severe financial strain. The real estate is all under mortgage to an insurance company, the inventory is being used under a blanket chattel mortgage to secure a bank line of credit, and the accounts receivable are all being factored. With total assets of $7 million, the company now needs an additional $450,000 to finance a building and fixtures for a new outlet.

1. How has the Investment Office selected, compensated, and controlled private equity fund managers? What explains the differences between their strategy in private equity with that in other asset classes (e.g., real estate)?

With an increase in business, the firm recruited widely. The firm, which had employed 2,000 people in 1982, tripled to 6,000 people by 1987.” Due to excessive focus on generating revenues, one insider put it as, “competing fiefdoms replaced interconnected businesses.” and “Making money was mostly what mattered.”

However, significant risks are prevalent in acquiring PTI. First, more one-third of PTI’s sales originated from five companies and it is uncertain that without Harry Elson’s personal efforts if their patronage will continue. Secondly, the bank valuation of PTI ($600K) appears inflated as the bank’s valuation is notably more than PTI’s book value ($292K), calculated with an inflated price/earnings multiple for a company with no proprietary

A shared cost among the potential investors could reduce the hardship of a single organization to support an unforeseen crisis. One

1) Given an asymmetric information problem, (1) how could a venture capital firm protect its equity investment from it? (2) Describe the problem.

options to obtain the needed capital and how you would approach securing this type of financing.

In the financing market, there is an important need to balance the powers between lenders and borrowers. In this market, the borrowers are in a relatively weak position to negotiate the interest rates of their loans, being the party in need. Lenders, in accordance to the law of supply and demand, can strategically withhold money supply to increase demand and interest rates. Historically, government regulators ensured, through usury laws, that consumers were protected against financial predators (Bowsher, 1974). However, the current trend in the financing market has moved steadily towards loosening the usury laws and allowing the markets to dictate interest rates. This paper will attempt to understand this trend through a series of six questions and answers.

to Jane Dokko, et. al. was “innovations in financing”. (2009) For whatever reason, be it greed or

In November 2003, Maria Ober, a vice president of Deutsche Bank Securities, received a client request for financing the acquisition of a large hospital-supply distributor. The client needed to present the seller with an offering price and an indication of financial commitment within two weeks. The contemplated transaction entailed a highly-leveraged acquisition of the target. The tasks for the student are to value the target firm and projected synergies, assess the credit worthiness of the target (i.e., its ability to bear the high debt), and critically evaluate the general design of the transaction.

Q1. What are the built-in tensions with a public private equity firm? How does Blackstone 's structure attempt to reconcile them?

Corporate financial decision is a crucial component of strategies that firms adopt to access funds in the external capital market to undertake new investment, for dividend payments, to maintain capital structure, for acquisition purposes, cash savings as precaution, among others. UniHost Corporation; the largest motel and hotel franchise in Canada is faced with a requirement to raise capital. UniHost is involved in the development, syndication, franchising and management of motels and hotels in Canada of which most are flagged under the Quality and Comfort brands. There are several options that the corporation can apply to raise capital ranging from debt financing, convertible bonds and high yield debt (DeThomas, 1992). The strengths of these financial options are outlined and the reasons for their recommendation in this situation are outlined in the succeeding paragraphs.

Banks issue credits to organizations seeking funds for there ventures. The bank usually “prefers a self-liquidating loan in which the use of funds will ensure a built-in or automatic repayment scheme” (Block & Hirt, 2005, Chapter 8, p.

initiative is to attract outside capital, given the lack of collateral and sufficient cash flows and the

Credit stock and debentures are the key type of long-term finance that is utilised by various associations to satisfy the prerequisite of assets suitably. In addition, advance stock is regularly isolated into diverse units rather as offer capital, and investors are asked for to purchase the quantity of units they require. Besides, the credit stock may be convertible or irredeemable and these stocks of different firms are exchange and their recorded worth will upsurge as indicated by the likelihood of the business, exercises in interest rate (Rigby, 2011).