The first volume dealt with the management of: cash flow (and the exchange of goods and services); risk; agency relationships; and information.
The firm manages these aspects by legal tools and practices in the context of all commercial transactions.
The second volume discussed investments. As voluntary contracts belong to the most important legal tools available to the firm, the second volume provided an introduction to the general legal aspects of generic investment contracts and payment obligations. This volume discusses funding transactions, exit, and a particular category of decisions raising existential questions (business acquisitions).
Transactions which can be regarded as funding transactions from the perspective of a firm raising the funding can be regarded as investment transactions from the perspective of an investor that provides the funding.
Although the perspective chosen in this volume is that of a firm raising funding, this volume will simultaneously provide information about the legal aspects of many investment transactions.
Funding transactions are obviously an important way to manage cash flow. All investments will have to be funded in some way or another.
The firm’s funding mix will also influence risk in many ways. Funding. The most important way to raise funding is through retained profits and by using existing assets more efficiently.
The firm can also borrow money from a bank, or issue debt, equity, or mezzanine securities to a small group of investors. Securities can also be issued to the public. I
n this case, the management of information will play a central role. For example, the marketing of securities to the public is constrained by the mandatory provisions of securities markets laws, and there can be ongoing disclosure and other obligations for issuers. Exit. The firm must manage exit-related questions in two contexts. First, the firm’s own investors will want an exit at some point of time.
There is a very wide range of exit forms depending on the investment. For example, an investor can sell his claims to another investor, the company can make payments to an investor.
