by Bruce Smith When I first began thinking about investing, it was easy to get excited about start-ups (not that it isn’t any longer, but I’ve had my share of broken bones along the way). The chance to get in on a Google, an Apple or an Amazon stock while in its infancy is everyone’s catnip. But here’s a cautionary tale that explains what I’ve learned the hard way. I spent over a decade at a...
Just as with public securities, private securities are generally either equity or debt, but that’s the simple part. The most commonly encountered forms of equity are called venture capital and “Private Equity” for private equity (yes…it’s used interchangeably), and senior vs. subordinated debt for private debt. They attract investment because they command higher returns, based solely on their...
We financed a scrap metal dealer once that needed additional working capital to purchase and process scrap because it had high cost overruns in building its large-scale shredding operation. Let’s just say that experience is everything, and you can learn from ours. Numerous lenders already were providing equipment financing with broad claims on the company’s assets – so we couldn’t use that...
When we talk about private securities, they can be split into two basic categories: Debt & Equity. While there are many many different flavors of each, every savvy investor needs to have a solid grasp on what makes one more appropriate than the other —especially before purchasing. We put together a slightly exhaustive overview of both for anyone wanting a quick refresher: The information...
The following outlines the major reasons why businesses may choose to use debt financing over issuing equity when capital is needed. Businesses and other entities can finance their enterprises by issuing equity or using debt, such as borrowing funds through loans or by issuing notes. Unlike equity, debt has a specified interest rate and a schedule of dates when interest is to be paid...
You don’t need to be a genius to understand what happens when you lend money to a private company, but there are important things you need to know. Let’s take the mystique out of private loans! Investments in Private Debt Whether called Promissory Notes, Senior Notes, Senior Secured Notes, or Subordinated Notes, they’re all a form of debt investment representing an obligation by a Borrower (the...
The information below provides an overview of debt-related investment, in particular Private Placement Offerings. Debt financing is raised by companies through the issuance of Securities called Promissory Notes, Senior Notes, Senior Secured Notes or Subordinated Notes. These terms indicated the underlying credit structure of a given debt Security and are described below. The amount of debt...
The information below provides a brief overview of Equity Securities. Companies raise capital in the form of either equity or debt. Equity represents an ownership interest in a for-profit company where the Net Equity Value of the company (i.e., total assets less indebtedness) and any ongoing profits are owned proportionately by the holders of the equity. Equity Securities are a form of...
In the interest of accessibility, here are some terms that any investor should be familiary with.
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