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Ch. 15: Raising Capital

Ch. 15: Raising Capital. Only pages 419-33 Venture Capital Selling Securities to the Public Underwriting IPO Underpricing Issuing Debt Shelf Registration. Venture Capital. First-stage, second-stage, mezzanine Participation Expense Evaluation techniques relate to capital budgeting

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Ch. 15: Raising Capital

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  1. Ch. 15: Raising Capital • Only pages 419-33 • Venture Capital • Selling Securities to the Public • Underwriting • IPO Underpricing • Issuing Debt • Shelf Registration

  2. Venture Capital • First-stage, second-stage, mezzanine • Participation • Expense • Evaluation techniques • relate to capital budgeting • Exit

  3. Selling Securities to the Public • Board of Directors approves • Securities and Exchange Commission registration • Waiting period • Preliminary prospectus (red herring) • Effective date, price, final prospectus • Initial public offering (IPO) • Seasoned equity offering (SEO, secondary or follow-on offering)

  4. Underwriting • Firm commitment underwriting • Best efforts underwriting • Underwriter’s buy price, offer price, spread • Underwriter’s noncash compensation • Aftermarket • Green Shoe provision (overallotment) • Lockup agreements

  5. IPO Underpricing • Costs • 1990s, 1999 • Participation • Explanations

  6. Issuing Debt • Process for issuing public debt is similar to stock • But more than 50% of debt is issued privately • SEC permits registration of securities in advance and sale during a two-year period Shelf Registration

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