Articles on issues; Access to Capital/ Expanding into Emerging Markets/ Placement funds/Small business for operations
Private Equity & Capital
Global Funding For Expansion
As much as 85% of the GDP growth of multinational companies is likely to come from outside the U.S. over the next several years. But as companies dive into fast-growing international markets, organizational structures are sometimes slow to follow. In the areas of risk management, cash and liquidity management, and access to capital, new kinds of expertise are imperative to successful overseas expansion. Banks, Private Capital Groups their overseas outlook and the strategies needed for success
Companies ready for global expansion have a wide range of needs and choices in accessing capital. Here are some ideas for how to raise cash depending on your company’s size and operations:
• A company with one or more international operating subsidiaries— each with an estimated borrowing need of $10 million or more—may use its international operating subsidiaries as borrowers along with its U.S. parent company. By doing so, it will increase the potential to borrow as it maximizes efficiency and liquidity.
• A company that has multiple international operating subsidiaries in different countries may find that, individually, these entities are too small. But together, they can create a reasonable borrowing need to source the working capital necessary to get started.
• A parent company that has small (but growing) international businesses in various operating subsidiaries—or, in a number of countries, each with a negligible amount of assets—may be able to fold those operating subsidiaries and their assets into the parent company’s credit facility, once a critical mass has been reached.
• A company that currently has no foreign subsidiaries but has plans to grow internationally may preprogram a credit facility for the addition of international subsidiaries as borrowers in designated jurisdictions.
Private Placement Memoranda (PPM) is Alternative Funding Source
Private Placement Memoranda Business plans do not provide information about the technical structure of an offering. The structure of an offering allows you to raise debt financing from a number of investors instead of trying to find one with the entire amount of capital you require. The PPM sets forth critical information such as: the purchase price per note, how many notes are being sold to investors, maturity date, rate of return, etc. These are crucial items that must be presented to a potential investor in proper form or they will not invest.
• A Subscription Agreement for purchasing the notes. Don't expect investors to give you capital based on a handshake. Would you invest funds into a company without signing a document that sets forth the terms and conditions of the loan? The Subscription Agreement sets forth these terms and conditions - this is the document the investor signs and gives you with their investment check. You will have a very hard time raising debt capital without this basic document. Another example would be the
• Promissory Note Agreement the note is the actual loan agreement between the investor and the company. You can't have a business loan without a loan agreement.
Private Capital Management
Private Management & Small Business Capital
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