Finance, page-2

By Morningstar

If a company requires a cash injection to expand existing operations, protect market share, develop new businesses or buy another company, it may require more funds than its retained earnings. The company's directors have two options: borrow the money or raise more equity.

Taking on debt requires the company's managers to have a reasonable expectation of steady cash flow to make regular interest repayments, and there is a risk that investors may feel the company is too highly geared (has too much debt in relation to shareholders' funds), which may weigh heavily on the share price.

Taken to the extreme, high debt magnifies the risk of bankruptcy, which is precisely what happened in the late 1980s when rising interest rates crippled some of Australia's highest-profile companies. Banks stopped lending to some companies during the 2008-09 financial crisis, which forced many listed companies to raise equity funds at vastly discounted prices in order to remain afloat.

Interest is a tax-deductible expense, however, and less equity raised means less of the company is being shared around. So debt certainly has its attractions.

Corporate finance strategists charge big fees to decide on the best way for companies to raise funds and, despite years of effort, research remains inconclusive on the ideal capital structure to maximise a corporation's value to shareholders.

It is a complex matter that spans issues as diverse as taxation, interest expense, public relations, and overall financial management, and that's probably all we need say about it for now.

If a company chooses to issue fresh equity, it is again faced with two main options: give all existing shareholders the right to buy more shares, or offer shares in a "placement" to a group of people, or an institution.

It also has a third, less common, option of creating a specialised spin-off company, which gives investors the opportunity to direct funds toward a specific aspect of the business, usually with high-growth prospects.



Or maybe

A crowd funding campaign
https://www.entrepreneur.com/article/228125

Or
Private loan