Sunday, August 17, 2008

Did you mix your Debt?

The question of whether debt increases or decreases a company's value has no one-size-fits-all answer, but here are some guidelines as you think about your own company.

Do you anticipate doing an initial public offering or selling your company within the next three to five years?
If so, then you've little choice but to ratchet up the company's growth rapidly -- which means that a credit line probably is essential. If your company is too new or too small to qualify for a credit line on its own, look for ways to pair an equity financing deal with a bank loan. (That strategy is increasingly possible, especially for companies who land investments from established venture capitalists, private equity funds, or repeat angel investors with contacts in the banking community.)

Is debt justifiable?
If your company's lack of funds stems from cash flow problems that require corrective measures (perhaps in your accounts receivable or payable systems), don't expect an outsider to applaud your unnecessary borrowing.

Ps: I'm not really sure. Like i said. I'm a girls. So, its up to my men. Its his problem. Not mine!



No comments: