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In this course you learn about the financing strategies for your business throughout its lifecycle.  You also learn about all the major debt and equity financing arrangements at an application based level.

In the debt sections of the course, you learn about how operating lines of credit work and what to watch out for.  We also talk about asset based lending facilities, term loans, and leasing.  Mezzanine financing is an increasingly popular way of replacing equity financing with hybrid financial instruments.  In the equity sections of the course, you learn about venture capital, private equity, and the process of going public.  Finally, you learn about how cost of capital and capital structure factor into your strategic thinking and decision making.

Intro Video Transcript

Most businesses need capital to exist in the exceptions are few in fact unless you can convince your customers to pay you up front for goods or services before you build them or deliver them then your business is going to need capital to survive. Now let's look at the various potential uses of capital. Capital can be used to fund ongoing operations. I've never met an employee who doesn't like to get pay and suppliers a simple ariel capital can also be used to fund capital expenditures to build and maintain plant equipment. Capital can be used for mergers and acquisitions and mergers and acquisition activity allows the company to purchase an incremental or adjacent businesses to accelerate their growth. Capital can be used to fund working capital everything from purchasing raw materials, assembling finished goods and selling goods to customers on credit as incentive to purchase. Capital can be replaced in refinancing opportunities. The idea here is to replace higher costs sources of capital with lower-cost sources of capital replacing equity with debt or higher costs at with lower-cost Debt. Capitalization of the business is another use of capital. Recapitalization covers a variety of circumstances but for example capital can be used to buy out of previous owner or capital could be used to monetize a portion of the shareholders’ investment and finally can be used as a reserve for financial flexibility or to build financial strength. Companies will hold excess capital or strategic purposes either as preventive measures to protect the company from downturns whereas it opportunistic measure to allow it to act quickly when opportunities present themselves. You probably didn't think of all these as potential uses for capital, few people do, most people think of capital all the context of ongoing bills and buying major capital expansions. Capital must serve both shareholder objectives and corporate objectives such as those that are listed on the screen before you. The corporate objectives in the shareholder injectors do not always coincide. For example shareholders may wish to monetize some of their investment by using available debt capacity in the company. At the same time the company may need new capital to fund our growth plan and to explain this just a little further because this is the second time I brought this up. This will be a situation where the company has debt capacity but has chosen not to use it to this point. So the company could raise financing and use those proceeds to pay a special dividend to the shareholders or to buy back shares as a means of modernizing a portion of a shareholder's investment without having the remaining shareholders dilute their interest in the company or having them sell a portion of their investment to realize some cash. Another potential area of conflicting these two objectives between the company and shareholders is a Mounty issue of new equity. The company may wish to pursue growth opportunities but lack the necessary debt capacity or debt funding the shareholder may be on willing to suffer the dilution caused by issuing new equity. And the third example might be Wendy Company may accept new equity or debt financing, however the reporting on the involvement of the new stakeholder closed be detrimental to the business. Some lenders has stringent reporting requirements that cause disruption. Some Private Equity Partners be intrusive to management. Other objectives for the company from those of the present management team or the present shareholder group. Financial strategy must be aligned with the corporate strategy. For the company to be successful, if the corporate strategy demand its growth plan then the capital must be ready and available you can be profitable and go bankrupt if you miss measure financing arrangements. In the corporate strategies to maximize the cash flow for the shareholders in the capital structure should be implemented to optimize its low funds and minimize the audience in cost. Debt financing has been much lower cost than equity financing. So long as the operating cash flows are sufficiently stable to support the debt service costs finding lower-cost funds create value for shareholders. Finally now businesses are enjoying growth their stabilities, some face challenges for many reasons and these companies still need to set up financing strategy to meet the needs of the business. The key priority in these types of situations will be the company's ability to access financing and the flexibility in terms of repayment. Intimately understand your corporate strategy, will position you to seek out these sources of capital that best meet the capital. The types of capital is vary widely on each of these dimensions and in each of the lessons of this course we will look at capital in this context. The availability of the various sources of capital will depend on the nature of the situation and the characteristics of the business. The business does not have to access capital simultaneously. New startup companies are limited in their stores the capital. They typically do not have access to debt financing you rely heavily on equity financing to get started up and get going. On the other hand mature companies are less attractive to growth investors. Typically these companies have assets and cash flows that can be used to raise and maintain and service debt financing. The amount of capital will be constrained by any number of factors such as security you have available to offer, the ability to pay financing costs and the ability to meet financial confidence. Sources of capital can also widely vary. From your own personal savings and perhaps those of family and friends to banks, to pension funds, private equity funds, venture capitalist and perhaps even retail investor someday when you take your company public. The term debt can vary from short-term sources of financing say credit from our suppliers to term loans and such as common shares of preferred shares. The cost dimension of a capital. Some capitals are available for free. Other sources are very expensive, it can cost you 25 percent or more, the conditions associated with maintaining and establishing the financing are important. Some sources don't come with any conditions at all say common shares which makes it harder to get into trouble. Other resources accomplished stringent conditions which have not met could cost you your company. Other factors to consider impacting the availability of capital aside from the company's position in the business lifecycle include the business attributes which include the size of the business, the level of profitability, consistency of historical results, experience of the management team and the company's position in the market the more favorable all these attributes of them were financing alternatives that are going to be available. Different industries have different risk profiles. Some industries are very sinkable. Such as commodity industries which caused profits to fluctuate widely. Industries such as consumer products, utilities are more stable. Factors such as these impact the availability of various sources of financing and regardless of the business in the industry the reality is that the capital markets themselves at their own degree of cyclicality. IPO may be hot one year and not the next. Thanks may landing me to a specific sector 1 year and different one the next, to not at all in the third year. This may be beyond the control of management bur must be a factor into your financing strategy. Keep in mind is sometimes you may raise capital when you can even when you don't need it. So to summarize this model first recognized there probably needs for capital that you may have realized at first blush. Second appreciate the objectives of capital and also recognize that the objectives of the shareholder and the corporation be complete the times. Third realize that strategy is not an isolated plan, its introhook to your overall strategic plan and finally when we go to evaluate the different sources of financing way all the dimensions capital. These images provide you with room to negotiate and make tradeoffs. That’s all for this lesson so until next time don't stop.

Learning Objectives

  • Align your capital structure with corporate strategy and business lifecycle
  • Identify and explain various sources of financing and their applicability to different situations
  • Assemble a financial plan to meet the financing needs of the organization

22 Reviews (81 ratings)Reviews

5
Member's Profile
Good overall presentation; however, had a lot of overlap with course by Blair titled "Financing Strategies - Capitalizing Your Business to Maximize Return." The only difference in this course is it went into greater detail on certain topics. However, case study was the same in both presentations.
5
Member's Profile
Excellent overview. I especially liked how Blair showed the alignment of company lifecycle to the proper sources of financing. The case study was excellent. WACC was a little thin, hope you have a more in-depth offering on this.
3
Member's Profile
The slides do not include the examples and details that were part of the actual presentation. As a result, I have no indication of which three questions were answered incorrectly on the FINAL EXAM.
4
Member's Profile
I liked how the instructor clearly defined the sources of financing. Also, the case study was insightful. Overall, case studies help explain the concepts much better than reviewing slides.
5
Member's Profile
Once again Mr. Cook delivered an excellent presentation. I enjoyed taking the course, learned a lot of things and saw perspectives/ thoughtful insights from the Mr. Cook. Well done sir!
3
Anonymous Author
Good info. Provides a wide range of financing options with sufficient data provided on each type. Presenters saying at the end of the modules in very annoying in my opinion
4
Anonymous Author
You will learn about how operating lines of credit works and what to watch out for. Very informative & reference material.
4
Anonymous Author
Great course with lots of practical info. The slides, however, are missing a lot of info discussed during the course.
4
Anonymous Author
Great class. I enjoyed learning about the different types of financing. Very easy to follow information.
5
Anonymous Author
Very solid overview of different financing sources. Instructor delivered the content in an engaging way.
3
Anonymous Author
Some questions were briefly touched on in the presentation. Overall good details financing strategies.
5
Anonymous Author
The instructor is engaging and informative. This is a good introduction to financing strategies.
5
Member's Profile
Great presentation! Hit all the high points of a complex topic in easy to understand terms!
5
Anonymous Author
I enjoyed taking this course. Blair provided very thoughtful insights and commentary.
5
Member's Profile
Very neat explanation.Finance professionals in early stage of their careers.
5
Member's Profile
Blair always does a great job. More thorough than just an overview.
3
Anonymous Author
Very helfpful for future financing avenues and IPO considerations.
4
Member's Profile
sometimes too quick speaking, but overall great!
4
Member's Profile
This was an interesting course.
5
Anonymous Author
Interesting overview.
5
Anonymous Author
Good level of detail.
4
Anonymous Author
Great refresher.

Prerequisites

Course Complexity: Intermediate

Prerequisite: Exposure to corporate finance

Advanced Preparation: None

 

  • It is assumed that the course participant has already developed competency in financial statement analysis, ratio analysis, cash flow analysis, and present value techniques. 
  • The course is targeting experienced professionals that already have an established financial or accounting background.

 

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  10:19Financing Lifecycle
Debt
  4:22Supplier Credit
  19:22Senior Debt
  12:06How Well Do You Know Your Credit Facility?
  5:30Mezzanine Financing (Debt/Equity hybrid)
Equity
  6:40Venture Capital
  7:06Private Equity
  15:49Initial Public Offerings (IPO)
Case Study
  9:17A Financing Case Study
Cost of Capital
  13:51Cost of Capital
Continuous Play
  1:53:05From Debt to Equity: Developing Financing Strategies for Your Company
SUPPORTING MATERIALS
  PDFFinancing Strategies Glossary Index
  PDFSlides: Developing Financing Strategy PDF
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM