Chap016s

Chap016s - Raising Capital Chapter Sixteen Venture Capital...

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Raising Capital Chapter Sixteen
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Venture Capital Private financing for relatively new businesses in exchange for stock Usually entails some hands-on guidance The ultimate goal is usually to take the company public and the VC will benefit from the capital raised in the IPO Many VC firms are formed from a group of investors that pool capital and then have partners in the firm decide which companies will receive financing Some large corporations have a VC division
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Selling Securities to the Public Management must obtain permission from the Board of Directors Firm must file a registration statement with the SEC SEC examines the registration during a 20-day waiting period A preliminary prospectus, called a red herring, is distributed during the waiting period If there are problems the company is allowed to amend the registration and the waiting period starts over Securities may not be sold during the waiting period The price is determined on the effective date of the registration
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Table 16.1 - I
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Table 16.1 - II
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Underwriters Services provided by underwriters Formulate method used to issue securities Price the securities Sell the securities Price stabilization by lead underwriter Syndicate – group of investment bankers that market the securities and share the risk associated with selling the issue Spread – difference between what the syndicate pays the company and what the security sells for in the market
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Firm Commitment Underwriting Issuer sells entire issue to underwriting
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This note was uploaded on 05/09/2008 for the course BUAD 306 taught by Professor Selvili during the Spring '07 term at USC.

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Chap016s - Raising Capital Chapter Sixteen Venture Capital...

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