Ch. 15: Raising Capital Only pages Venture Capital

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Presentation transcript:

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 Exit

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)

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

IPO Underpricing Costs 1990s, 1999 Participation Explanations

Issuing Debt Shelf Registration 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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