Raising Capital

Get the Money You Need to Grow Your Business

 Raising Capital

Author: Andrew J. Sherman
Pub Date: April 2012
Print Edition: $34.95
Print ISBN: 9780814439012
Page Count: 464
Format: Paper or Softback
Edition: Third Edition
e-Book ISBN: 9780814417041

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Table of Contents


Chapter 1: Capital Formation Strategies and Trends

Understanding the Natural Tension Between

Investor and Entrepreneur 4

Understanding the Private Equity Markets 6

Understanding the Different Types of Investors 6

Understanding the Different Sources of Capital 8

Common Mistakes Entrepreneurs Make in the

Search for Capital 12

How Much Money Do You Really Need? 13

Consider Staged Investment 13

Capital-Formation Strategies 14

The Due Diligence Process 16

Key Best Practices Affecting Capital Formation

in the New Millennium 19

Are You Really, Really Ready to Raise Capital? 21

Chapter 2: Selecting the Best Legal Structure for Growth

Proprietorship 26

Partnership 27

Corporation 28

Limited Liability Company 33

Evaluating Your Selected Legal Structure 36

Establishing Effective Boards of Directors and

Advisory Boards 42

Chapter 3: The Role Your Business Plan Plays

The Mechanics of Preparing a Business Plan 52

Some Final Thoughts on Business Planning 63

Chapter 4: Start-Up Financing

Financing the Business with Your Own Resources 70

Heaven on Earth—Finding an Angel Investor 72

Other Sources of Seed and Early-Stage Capital 85

Additional Resources 99

Chapter 5: The Art and Science of Bootstrapping

Twelve Proven Bootstrapping Techniques and

Strategies 104

Bootstrapping: The Dark Side 112

Chapter 6: Private Placements

Federal Securities Laws Applicable to Private

Placements 116

State Securities Laws Applicable to Private

Placements 119

Preparing the Private Placement Memorandum 120

Subscription Materials 124

Compliance Issues 125

Accepting Subscriptions 126

Changing or Updating the PPM Before

Completion of the Offering 126

After the Closing 127

The Rise of Secondary-Market Private

Placements and the Story of SecondMarket 127

Practical Tips for Ensuring a Successful PPM

Offering 129

Chapter 7: Commercial Lending

The Basics of Commercial Lending 134

Preparing for Debt Financing 136

Understanding the Legal Documents 146

Periodic Assessment of Banking Relationships 148

Chapter 8: Leasing, Factoring, and Government Programs

Leasing 152

Factoring 157

SBA Programs 164

Chapter 9: Venture Capital

Venture Capital Investing Trends 178

Primary Types of Venture Capitalists 180

Preparing to Meet with Venture Capitalists 182

Central Components of the Venture Capitalist’s

Investment Decision 189

Due Diligence Is a Two-Way Street 192

Balancing Your Needs and the Venture

Capitalist’s Wants 193

Understanding the Venture Capitalist’s Decision

Process 194

Chapter 10: Anatomy of a Venture Capital Transaction

Evolution of Venture Capital Deal Terms 198

Negotiating and Structuring the Deal 198

Aligning Business-Plan Analysis and Investor

Concerns with Term Sheet Provisions 201

Understanding the Legal Documents 203

Getting Ready for the Next Round 207

2002 and 2003: The “Down-Round” Dilemma 207

The Pre- and Post-2010 Market: The Big Chill

and the Slow Thaw 209

Chapter 11: Preparing for an Initial Public Offering

Recent History 212

The Present and Future 212

Advantages and Disadvantages of an IPO 215

The Hidden Legal Costs 220

Preparing for the Underwriter’s Due Diligence 222

Selecting an Underwriter 226

Selecting an Exchange 231

Alternatives to Using a Traditional IPO 236

Chapter 12: The Mechanics of an Initial Public Offering

An Overview of the Registration Process 242

The Registration Statement 248

The Road Show 256

The Waiting Period 257

Valuation and Pricing 258

The Closing and Beyond 259

Ongoing Reporting and Disclosure Requirements 259

Resources on IPOs and the Public Securities

Markets 265

Chapter 13: Franchising, Joint Ventures, Co-Branding and


Business-Format Franchising 270

Joint Ventures 281

Co-Branding 285

Licensing 290

Chapter 14: Mergers and Acquisitions

Current Trends Affecting Mergers and Acquisitions

in a Turbulent Environment 301

Develop an Acquisition Plan 303

Analyzing Target Companies 307

Selecting the Target Company 308

Conducting Due Diligence 310

Valuation, Pricing, and Sources of Acquisition

Financing 313

Financing the Acquisition 314

Structuring the Deal 315

Preparing the Defi nitive Legal Documents 317

Postclosing Matters 320

Chapter 15 Capital-Formation and Business Growth Resources


Federal Agencies 332

Business Growth Resources on the Web 334

Internet Resources to Learn More About Private

Placements, Angel Investors, Venture Capital

Networks, Accelerator Programs, and Other

Alternative Sources of Funding 337

International Finance Institutions on the Web 340

Guidebooks, Publications, and Networks

(Including Computer Software) 341

High-Tech Exporting Assistance 342

Appendix 343

Index 431

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