Raise Capital

Nowadays and according to surveys, seeking funds from all over the world, from various financial units (newly established, mature companies, start-up and others) account 40 to 50 trillion Euros. All these capital requirements deal with ideas, business plans, development and others, with promised returns that start from 6% - 8% and reach up to 100%. Most of them repay 12% to 18%. On the other side, worldwide disposable funds (institutional and private) account for 2,5 to 3 trillion Euros. As part of institutional investors, about 80% of the funds, starts with the assumption (by the Funds Rulebook), that invests in companies with stock ISIN, visible on global financial reporting systems (Bloomberg, Reuters, etc.).
It is easily understood that this condition is not only set for the purpose of visibility, but also for reasons of reliability of the tested investment proposals, as the average fund manager wants to feel safe, that the applicant company, which is thousands of kilometers away can be established far from it, it is real, accountable somewhere and particularly to a Stock Market Authority, keep transparency procedures.

In order to attract an investor with chances of success and in terms of seriousness, whether is a fund or private, the requesting party should present to the negotiating table three key documents:
(a)    a thorough and based on international standards Business Plan with five-year horizon, which will necessarily include competition analysis, a marketing plan and financial model with all the assumptions of profitability and cash flows,
(b)    an Evaluation Report, approved by an independent Estimator, based on the above Business Plan,
(c)     and a Legal Audit Report, which would present both the institution and the sector which it operates.

Unfortunately for them, most of the entrepreneurs put sloppy efforts on capital attraction, in the best of cases with a few pages of PowerPoint, accompanied by some tables 5-6 series with unfounded assumptions of revenue and profits. And so, they fail. However, if an entrepreneur grasps the above fact and proceed to set up a complete file, which will include the above, will actually have come to pay 70% - 80% of the cost of listing the shares on a Stock Market and will cover 80% to 90% of the contents of a full Prospectus required for the application. So it is absurd not to proceed in a completion move, which would give him access to a three times bigger world market of capital available than can be addressed up to that time. Apart from the possibility given to a listed company to address on most of the international pools of capital, the practice shows that the process of listing, can find the initial capital, or at least part of it, through the narrow circle of the operator itself, from friends, colleagues, relatives, clients and suppliers.

This feature is obtained by the company, as the listing of the Company let the owner to turn in these circles with high level of transparency, because:
(a)    investors always invest on the man who will run a business idea and then on the idea itself, so it makes sense to invest in a business that the man is being accepted and its skills are being recognized,
(b)    of the listing itself, it marks one more step in the development of each company,
(c)    the operator does not need to go into negotiations with potential investors regarding the sale price of the share, as defined / approved by a truly independent third party, i.e. by the Board of the Stock Exchange and
(d)    of course the obvious, that the shares they will receive, in addition to the dividend yield that can give, it is possible to write capital gains in the stock dash as a tradable investment product.
In conclusion, the listing of a company that is interested in finding new capital in a Stock Market, it is not a costly option, it is an investment option in terms of profile, seriousness and reliability. It is a one-way choice.

Do you know that...

  • Foreigners own some 700,000 hectares of land in Romania, around 8.5 percent of the country’s ploughable area.

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