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Introduction ·
Cooke's Law Home |
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. | Equity Financing | |
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Equity financing involves private and public placements of a business' securities ignored to raise needed capital for a business. The most common equity investment is the purchase of a company's stock and the use of "Common Stock" is the most prevalent. The corporation sells an ownership interest in the company and the buyer gets a share of dividends (if issued), control of the company based on percentage of ownership and a hope to share in the company's profits. While shares can be divided into various classes with different rights, such as voting versus nonvoting shares, the capital structure of the corporation can also include preferred stock. Preferred stock will take preference over common stock in the payment of dividends and may also have preference over the assets of the corporation upon a corporate liquidation. Typically, common shareholders will have voting control over the election of directors and corporate business and preferred shares will be non-participating. Advanced structures may also give preferred shareholders the right to convert their preferred shares to common shares based upon a previously agreed formula. Another part of equity financing includes the use of Options and Warrants. Options provide purchase rights, but the corporation does not raise any finances until the option to purchase shares is exercised. The corporation can use options in employee incentive plans and in corporate control programs. Warrants are options to purchase corporate stock at a particular price. If you have questions about using debt and equity in your business, please feel free to contact Mr. Cooke at (312) 497-9002 or by email at "gc@Cookeslaw.com". Mr. Cooke's fee is $300.00 per hour. |
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