Capital Choices for your high growth company
27 October 2006
I had a opportunity to speak at a York Technology Association CFO Peer Group Meeting last week. It’s a great opportunity for CFOs of all stages of growth to share and brainstorm on ideas, issues, and challenges with a group of peers. The topic that I was speaking on was “Effecient Capital Structures for Technology Companies”. We had a great discussion on the features and pros and cons of the various types of financing instruments available to high growth companies. If you are interested in learning more about the YTA Peer Groups, please contact Vicki Wilhelm at info@yorktech.ca.
We put together a table that outlines the various capital options available in the marketplace today. While certainly not exhaustive, it’s not a bad snapshot of the characteristics of each instrument. We offer it to you for your consideration as you might be thinking about the best financial instrument to grow your company given your company’s stage in it’s lifecycle and growth profile.
| Instrument
| Target Cost / Return Expectations
| Features
| Purpose
| Providers |
| Common Shares
| 40%+
|
|
|
|
| Preferred Shares
| 35%
|
|
|
|
| Convertible Notes / Debenture
| 25%
|
|
|
|
| Mezz Debt / High Yield
| 17-19%
|
|
|
|
| Sub Debt
| 10-17%
|
|
|
|
| Senior Secured
| Prime – Prime + 3%
|
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