Advantages And Disadvantages Of Equity Finance Essay

Equity finance Advantages and disadvantages of equity finance Equity finance can sometimes be more appropriate than other sources of finance, eg bank loans, but it can place different demands on the Company and its business.. The main advantages of equity finance are: 1. The funding is committed to our business and our intended projects. Investors only realise their investment if the business is doing well, eg through stock market flotation or a sale to new investors. 2. We will not have to keep up with costs of servicing bank loans or debt finance, allowing us to use the capital for business activities. 3. Outside investors expect the business to deliver value, helping us explore and execute growth ideas. 4. The right selection additional investors in India can bring valuable skills, contacts and experience to our business. They can also assist with strategy and key decision making. 5. In common with us, investors have a vested interest in the business success, ie its growth, profitability and increase in value. 6. Investors are often prepared to provide follow-up funding as the business grows. The principal disadvantages of equity finance are: 1. Raising equity finance is demanding, costly and time consuming, and may take management focus away from the core business activities. 2. Potential investors will seek comprehensive background information on the Company and our business. They will look carefully at past results and forecasts and will probe the management team.Show MoreRelatedDifferent Opportunities For Sourcing Capital For The New Venture / Benefits And Dis Benefits Of Each Funding Source Essay1687 Words   |  7 Pagesin exploring these options. 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