Monday, September 17, 2012

Discussions about the Financial Management by M.Azim Ulfati 

Your new small business has really grown, but now it needs a substantial infusion of capital. A venture capitalist firm has agreed to invest the money you need. In return, the venture capitalist firm will own 75 percent of the business, and someone chosen by the venture capitalist will replace you as CEO. You will retain the titles of founder and chairman of the board.  

Analyze the benefit of taking the money versus losing control over your business. Provide a rationale with your response.
From Case Study 17.3, analyze what the financial manager provided to the management of Comet Skateboards. Imagine a large firm approached Comet Skateboards with an offer of acquisition. Outline the major pros and cons of such an offer.

I think for personality and me in order to lose the control over my business and to be chosen as the CEO by the venture capitalist depends on my short term and long term plans and decisions and also to the financing of the business and how the capital will create future success.
How ever a venture capitalist would invest in the business venture and would provide capital for start up or expansion and would support the small companies and they will manage the fund and will be looking for a higher rate or return than would be given by more traditional investments.

Usually a lot of these venture capitalists may have no business experience applicable to the industry that the company is involved in, and is focused on the potential rate of return company, which can provide.
I think there may be opportunities for me to grow creativity as the founder and chairman of the board and I will be very happy not only for how the business will continue without any risk but also how good influence I may have within the company. I will step down from my small grown up business and would let investors decide to invest and enhance better plans raising the capital.
With that being said, I will lose the control over my business as the owner but I will benefit taking money versus losing control over the business. The benefit will be like the following.
If I have loans from, I don’t have to repay it.
I do not need to auction or sell business.
I don’t take any risks because the investor will be responsible for it.
I will use the investors’ money and will grow my business.
The capitalists will be in charge to find contacts, information’s, resources and strategic thinking on how to grow business.
Venture capitalists would assist me to decrease the losing of business and entirely busted business due to recession or any other lack of funding.

Financial managers has made a great financial agenda to keep the money stability for Comet Skateboard and to bring potential impacts for the products of the company and assist Salfi in his business. It is very important for Salfi’s company to have and reach to every thing from customer service to all other financial management parts of the company in order to well manage the financial resources for the company. And in order to make profit and keep the sustainability of the company, there is management of cash, preparing of taxes, shareholders relation, pros and cons to be smart about within the business. In order to gain profit, it is important to have and look for the best customer service, management, changes in the previous failed plans and bringing new innovation that work for the company, getting enough liquid assets and getting new skills and stimulating the economy at all time and at the same time watch for the cons for changing the social, economical or political situations, downsizing, replacement of employees and so on.

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