|
Corporate
Financing
Corporate
finance is the area of finance dealing with monetary
decisions that business enterprises make and the tools
and analysis used to make these decisions. The primary
goal of corporate finance is to maximize corporate value
while managing the firm's financial risks. Although it
is in principle different from managerial finance which
studies the financial decisions of all firms, rather
than corporations alone, the main concepts in the study
of corporate finance are applicable to the financial
problems of all kinds of firms.
The
discipline can be divided into long-term and short-term
decisions and techniques. Capital investment decisions
are long-term choices about which projects receive
investment, whether to finance that investment with
equity or debt, and when or whether to pay dividends to
shareholders. On the other hand, short term decisions
deal with the short-term balance of current assets and
current liabilities; the focus here is on managing cash,
inventories, and short-term borrowing and lending (such
as the terms on credit extended to customers).
The terms
corporate finance and corporate financier are also
associated with investment banking. The typical role of
an investment bank is to evaluate the company's
financial needs and raise the appropriate type of
capital that best fits those needs. Thus, the terms
“corporate finance” and “corporate financier” may be
associated with transactions in which capital is raised
in order to create, develop, grow or acquire businesses.
These may
include
ü
Raising
seed, start-up, development or expansion capital
ü
Mergers,
demergers, acquisitions or the sale of private companies
ü
Mergers,
demergers and takeovers of public companies, including
public-to-private deals
ü
Management
buy-out, buy-in or similar of companies, divisions or
subsidiaries – typically backed by private equity
ü
Equity
issues by companies, including the flotation of
companies on a recognised stock exchange in order to
raise capital for development and/or to restructure
ownership
ü
Raising
capital via the issue of other forms of equity, debt and
related securities for the refinancing and restructuring
of businesses
ü
Financing
joint ventures, project finance, infrastructure finance,
public-private partnerships and privatisations
ü
Secondary
equity issues, whether by means of private placing or
further issues on a stock market, especially where
linked to one of the transactions listed above.
ü
Raising
debt and restructuring debt, especially when linked to
the types of transactions listed above
|
