Discussion Question 1 Week 10 - Assignment Example

Discussion Question Week 10 Discussion Question Week 10 If one agrees to accept the offer of the venture capitalist, the financial woes of the company will be solved but it would mean a loss of control for the business. This means that the venture capitalist will have a say in major decisions of the company. The venture capitalist however, can provide professional management consulting advice to the company (Chapter 17 - Financial management). With the capital infusion from the venture capitalist, the business will be revived and may even gear up for expansion.

Unlike debt capital, equity capital is more expensive because one has to pay dividends to the shareholders. An advantage of an equity investment is that when the business becomes unprofitable, the company does not have to pay the venture capitalist anything.2. The financial manager was able to manage the cash flows of the company well. He was able to prioritize the financial needs of Comet Skateboards. Capital was reinvested appropriately. He controlled the expenses of the company. Outflows were properly matched with the inflows.

If a large firm approached Comet Skateboards with an offer of acquisition, a major advantage is that Comet will be able to expand its business. They can target a bigger market since they have the funds to explore other markets aside from the current ones. A major drawback of this offer is that the new owners might have a different outlook from the previous owners, meaning they might not maintain the triple bottom line company that Comet is known for. Moreover, this would mean a loss of ownership and control for Salfi, its co-founder, considering that the business is very valuable to him.

ReferencesCase 17.3 - Comet Skateboards rides the triple bottom line.Chapter 17 - Financial management.