(1) in order to expand the company
In order to expand the company's financing, it will be mainly used for expanding production and reasonable mergers and acquisitions. Take a potato stall as an example: my potato stall attracted 50 million yuan of investment, and I used this money to buy the potato stall in the whole street or all the potato fields in this area. The purpose of these investments is to monopolize more assets in the competition and prepare for future development.
(2) Do not expand the company's scale
It is not to expand the company's financing and use it to acquire assets and patents at high prices, so as to achieve the purpose of conveying the company's interests. Or my potato stand. I spent 50 million yuan on my brother's pancake stall, but this pancake stall is actually only worth 1 10,000. Nevertheless, I still want to declare that this pancake stall uses "irreplaceable technology" to produce pancakes, which has "broad market prospects". This is the obvious benefit transfer.
2. What kind of financing method does the company adopt?
The financing methods of enterprises can be divided into two types. One is what we call debt financing, the other is equity financing.
(1) The so-called debt financing is actually similar to borrowing money from a bank, which means that I borrow money from others to achieve the purpose of financing. Then, after borrowing money, you have to pay back the principal and interest of others, but the creditor means that the party who lent you money usually does not participate in your company. You don't need to give him your equity, you just need to pay back your principal and interest.
Advantages: no dilution of equity.
Disadvantages: On the one hand, it is difficult for small companies to have sufficient collateral, and banks are reluctant to lend to small companies, which is often called "timely assistance". On the other hand, it needs to be repaid at maturity, otherwise it may face bankruptcy.
(2) Equity financing means that you want to transfer the ownership of the company to the party that lent you money or gave you money. Then we call it equity financing. Equity financing means that you don't need to repay its principal and interest. Generally speaking, you need to give part of your real ownership to investors or to your investors. The most representative of equity financing is equity financing.
Advantages: no need to return.
Disadvantages: expensive, equity financing will dilute equity, which is a very serious problem. On the one hand, everyone knows that the original shares are very valuable, and the original shareholders naturally don't want to give them to others. On the other hand, it may lead to the transfer of control. If other parties buy enough shares, the shareholders' meeting is likely to be able to suppress the original founder's vote when voting, and then pass the decision that the founder does not want to see.