30+mba-第15部分

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potentially　valuable　opportunity　to　raise　relatively　risk…free　money。　It　is　riskfree　
to　the　business　but　risky；　sometimes　extremely　so；　to　anyone　investing。　
Essentially　this　type　of　capital；　known　collectively　as　equity；　consists　of　the　
issued　share　capital　and　reserves　of　various　kinds。　It　represents　the　amount　
of　money　that　shareholders　have　invested　directly　into　the　pany　by　
buying　shares；　together　with　retained　profits　that　belong　to　shareholders　
but　which　the　pany　uses　as　additional　capital。　As　with　debt；　equity　
es　in　a　number　of　different　forms　with　differing　rights　and　privileges。　
Ordinary　shares　form　the　bulk　of　the　shares　issued　by　most　panies　
and　are　the　shares　that　carry　the　ordinary　risks　associated　with　being　in　
business。　All　the　profits　of　the　business；　including　past　retained　profits；　
belong　to　the　ordinary　shareholders　once　any　preference　share　dividends　
have　been　deducted。　Ordinary　shares　have　no　fixed　rate　of　dividend；　indeed　
over　half　the　panies　listed　on　US　stock　markets　pay　no　or　virtually　
no　dividend。　These　include　high…growth　panies　such　as　Google　and　
Microso。。；　which　argue　that　by　retaining　and　reinvesting　all　their　profits　
they　can　create　be。。er　value　for　shareholders　than　by　distributing　dividends。　
A　pany　does　not　have　to　issue　all　its　share　capital　at　once。　The　total　
Finance　61　
amount　it　is　authorized　to　issue　must　be　shown　somewhere　in　the　accounts；　
but　only　the　issued　share　capital　is　counted　in　the　balance　sheet。　Although　
shares　can　be　partly　paid；　this　is　a　rare　occurrence。　
Preference　shares　get　their　name　for　two　reasons。　First；　they　receive　their　
fixed　rate　of　dividend　before　ordinary　shareholders。　Second；　in　the　event　of　
a　winding　up　of　the　pany；　any　funds　remaining　go　to　repay　preference　
share　capital　before　any　ordinary　share　capital。　In　a　forced　liquidation　this　
may　be　of　li。。le　fort；　as　shareholders　of　any　type　e　last　in　the　queue　
a。。er　all　other　claims　from　creditors　have　been　met。　
Class　A　and　Class　B　shares　are　cases　where　categories　of　shareholder　
are　singled　out　for　more　or　less　favourable　treatment。　For　example；　class　
A　shares　are　o。。en　given　up　to　five　votes　per　share；　while　class　B　gets　one。　
In　extreme　cases　class　B　shareholders　can　get　no　votes　at　all。　panies　
will　o。。en　try　to　disguise　the　disadvantages　associated　with　owning　shares　
with　fewer　voting　rights　by　naming　those　shares。　One　of　the　most　famous　
examples　was　their　use　by　the　Savoy　Hotel　Group　to　ward　off　an　unwanted　
takeover　by　Trusthouse　Forte。　While　Trusthouse　was　able　to　buy　70　per　cent　
of　Savoy　shares　on　the　open　market；　they　could　secure　only　42　per　cent　of　
the　voting　rights　as　they　were　only　able　to　buy　class　B　shares；　the　A　shares　
being　in　the　hands　of　the　Savoy　family　and　allies。　
Reserves；　a　typically　misleading　term　in　all　accounting；　means　profits　
of　various　kinds　that　have　been　retained　in　the　pany　as　extra　capital。　
Also　important　is　what　the　term　reserves　does　not　mean。　It　does　not　mean　
actual　money　held　back　in　reserve　in　bank　accounts　or　elsewhere。　Reserves　
e　from　retained　profits　over　many　years　but　are　reinvested　in　buildings；　
equipment；　stocks　or　pany　debts；　just　like　any　other　source　of　capital；　
and　are　rarely　held　in　cash。　
The　main　categories　of　reserves　are　as　follows：　
。　Profit　and　loss　account；　ie　cumulative　retained　profits　from　ordinary　
trading　activities。　
。　Revaluation　reserves；　being　the　paper…profit　that　can　arise　if　certain　
assets　are　revalued　to　current　price　levels　without　the　assets　concerned　
being　sold。　
。　Share　premium　account；　ie　the　excess　over　the　original　par　value　of　a　
share　when　new　shares　are　offered　for　sale　at　an　enhanced　price。　Only　
the　original　par　value　is　ever　shown　as　issued　share　capital。　
SOURCES　OF　EQUITY　CAPITAL　
There　are　two　broad　sources　of　equity：　private　equity；　usually　put　in　by　
individuals　or　small　groups　of　individuals　who　for　hopefully　the　prospects　
of　greater　returns　will　take　on　greater　risks；　or　public　capital　through　a　
share　issue　on　a　stock　market。
62　The　Thirty…Day　MBA　
Private　equity　
There　are　three　main　sources　of　private　equity：　business　angels；　venture　
capital　firms　and　corporate　venture　funding。　
Business　angels　
One　likely　first　source　of　equity　or　risk　capital　will　be　a　private　individual　
with　his　or　her　own　funds；　and　perhaps　some　knowledge　of　your　type　of　
business。　In　return　for　a　share　in　the　business；　such　investors　will　put　in　
money　at　their　own　risk。　They　have　been　christened　‘business　angels’；　a　
term　first　coined　to　describe　private　wealthy　individuals　who　back　a　play　
on　Broadway　or　in　London’s　West　End。　
Most　angels　are　determined　upon　some　involvement　beyond　merely　
signing　a　cheque　and　may　hope　to　play　a　part　in　your　business　in　some　way。　
They　are　hoping　for　big　rewards　–　one　angel　who　backed　Sage　with　￡10；000　
in　its　first　round　of　￡250；000　financing　saw　his　stake　rise　to　￡40　million。　
These　angels　frequently　operate　through　managed　networks；　usually　
on　the　internet。　In　the　UK　and　the　United　States　there　are　hundreds　of　
networks；　with　tens　of　thousands　of　business　angels　prepared　to　put　up　
several　billion　pounds　each　year　into　new　or　small　businesses。　
Finding　a　business　angel　
The　British　Business　Angels　Association　（bbaa。uk）　has　an　online　
directory　of　UK　business　angels。　The　European　Business　Angels　Network　
（eban）　has　directories　of　national　business　angel　associations　both　inside　
and　outside　of　Europe　at　（eban　》　Members）　from　which　you　can　
find　individual　business　angels。　
Venture　capital　
Venture　capital　（VC）　providers　are　investing　other　people’s　money；　o。。en　
from　pension　funds。　They　have　a　different　agenda　from　that　of　business　
angels；　and　are　more　likely　to　be　interested　in　investing　more　money　for　a　
larger　stake。　
In　general；　VCs　expect　their　investment　to　have　paid　off　within　seven　
years；　but　they　are　hardened　realists。　Two　in　every　10　investments　they　
make　are　total　write…offs；　and　six　perform　averagely　well　at　best。　So；　the　one　
star　in　every　10　investments　they　make　has　to　cover　a　lot　of　duds。　VCs　have　
a　target　rate　of　return　of　30　per　cent　plus；　to　cover　this　poor　hit　rate。　
Raising　venture　capital　is　not　a　cheap　option　and　deals　are　not　quick　to　
arrange　either。　Six　months　is　not　unusual；　and　over　a　year　has　been　known。　
Every　VC　has　a　deal　done　in　six　weeks　in　its　portfolio；　but　that　truly　is　the　
exception。
Finance　63　
Finding　venture　capital　
The　British　Venture　Capital　Association　（bvca。uk）　and　the　European　
Venture　Capital　Association　（evca）　both　have　online　
directories　giving　details　of　hundreds　of　venture　capital　providers。　The　
Australian　Government　（austradeict。gov。au/Globl…VC…directory/　
default。aspx）　has　a　global　venture　capital　directory　on　this　website　and　the　
National　Venture　Capital　Association　in　the　United　States　has　directories　
of　international　venture　capital　associations　both　inside　and　outside　the　
United　States　（nvca　》　Resources）。　
You　can　see　how　those　negotiating　with　or　receiving　venture　capital　rate　
the　firm　in　question　at　The　Funded　website　（thefunded）　in　terms　
of　the　deal　offered；　the　firm’s　apparent　petence　and　how　good　they　
are　managing　the　relationship。　There　is　also　a　link　to　the　VC’s　website。　The　
Funded　has　2；500　members。　
Corporate　venturing　
Venture　capital　firms　o。。en　get　their　hands　dirty　taking　a　hand　in　the　
management　of　the　businesses　they　invest　in。　Another　type　of　business　is　
also　in　the　risk　capital　business；　without　it　necessarily　being　their　main　line　
of　business。　These　firms；　known　as　corporate　venturers；　usually　want　an　
inside　track　to　new　developments　in　and　around　the　edges　of　their　own　
fields　of　interest。　For　example；　Microso。。；　Cisco　and　Apple　have　billions　of　
dollars　invested　in　hundreds　of　small　entrepreneurial　firms；　taking　stakes　
from　a　few　hundred　thousand　dollars　up　to　hundreds　of　million。　
And　it’s　not　just　high…tech　business　that　take　this　approach。　McDonald’s　
held　a　33　per　cent　stake　in　Prêt　à　Manger　while　it　worked　out　where　to　take　
its　business　a。。er　saturating　the　burger　market。　HM　Revenue　and　Customs　
（hmrc。gov。uk/guidance/cvs。htm）　has　a　useful　guide　entitled　‘The　
Corporate　Venturing　Scheme’；　explaining　the　scheme；　tax　implications　and　
sources　of　further　information。　
Private　capital　preliminaries　
Two　important　stages　will　be　gone　through　before　a　private　investor　will　
put　cash　into　a　business。　The　emphasis　put　on　these　stages　will　vary　according　
to　the　plexity　of　the　deal；　the　amount　of　money　and　the　legal　
ownership　of　the　funds　concerned。　For　example；　a　business　angel　investing　
on　their　own　account　can　accept　greater　uncertainty　than；　say；　a　venture　
capital　fund　using　a　pension　fund’s　money。　
Due　diligence　
Usually；　a。。er　a　private　equity　firm　signs　a　le。。er　of　intent　to　provide　capital　
and　you　accept；　it　will　conduct　a　due　diligence　investigation　of　both　the　
management　and　the　pany。　During　this　period　the　private　equity　firm　
64　The　Thirty…Day　MBA　
will　have　access　to　all　financial　and　other　records；　facilities；　employees　
etc　to　investigate　before　finalizing　the　deal。　The　material　to　be　examined　
will　include　copies　of　all　leases；　contracts　and　loan　agreements　in　addition　
to　copious　financial　records　and　statements。　It　will　want　to　see　any　management　
reports；　such　as　sales　reports；　inventory　records；　detailed　lists　of　
assets；　facility　maintenance　records；　aged　receivables　and　payables　reports；　
employee　organization　charts；　payroll　and　benefits　records；　customer　
records　and　marketing　materials。　It　will　want　to　know　about　any　pending　
litigation；　tax　audits　or　insurance　disputes。　Depending　on　the　nature　
of　the　business；　it　might　also　consider　ge。。ing　an　environmental　audit　
and　an　insurance　check…up。　The　sting　in　the　due　diligence　tail　is　that　the　
current　owners　of　the　business　will　be　required　to　personally　warrant　that　
everything　they　have　said　or　revealed　is　both　true　and　plete。　In　the　
event　that　proves　not　to　be　so；　they　will　be　personally　liable　to　the　extent　of　
any　loss　incurred　by　those　buying　the　shares。　
Term　sheet　
A　term　sheet　is　a　funding　offer　from　a　capital　provider。　It　lays　out　t