Planning and financing points of long-term funds
In terms of issuance, it is necessary to weigh the industry characteristics of investment, operational risks, investor preferences, investment ability, sources of funds, allocation of management rights, cash flow, laws and regulations, tax burden and other factors, and determine the appropriate amount of self-owned capital and the proportion of capital contribution of each shareholder. The source of shareholders can be considered from the following directions:
First, the original promoters in Taiwan Province contributed capital in cash, technology, patents or machinery and equipment.
2. Investors in the upper and lower reaches of the mainland, or investors with private relationships.
3. "Venture capital companies" or "development companies" outside the mainland specialize in enterprise investment.
4. Joint venture partners in the Mainland.
In the aspect of borrowing, it is necessary to comprehensively consider the credit conditions sought by creditors, the borrowing capacity of the institution itself, the future principal and interest cash flow, the impact on the company's financial structure and credit, and the cost of funds generated by borrowing, and then draw up an appropriate loan amount and an exact and feasible repayment plan. The sources of long-term debt are as follows:
1. Long-term loans: you can borrow from financial institutions (such as banks or trust companies), shareholders (shareholders' loans can be converted into capital increase depending on the future business development of the company), counterparties (including royalties or deposits received in advance) and relevant institutions of the mainland government.
2. Issuing corporate bonds: issuing corporate bonds to specific objects or unspecified objects.
3. Long-term payables: for example, project maintenance or machine rental payables.
For the company, the funds raised by public offering are its own funds and belong to "shareholders' equity"; The income from borrowing is foreign capital, which is a "debt item". Both of them have different influences on the company's financial structure, capital use period, debt service pressure, management right distribution and company image. Taiwanese businessmen should plan carefully.
Generally speaking, Taiwanese businessmen prefer sole proprietorship to partnership for fear of possible management problems in the future. However, a wholly-owned enterprise is often limited by the sponsor's own capital contribution ability, or lacks the assistance of entrepreneurial partners in information, funds, corporate credit, business opportunities and so on. , and must meet the needs of the company's business development, it is difficult to smoothly expand the business scale or create profit space.
Unless it is 100% sole proprietorship, when inviting joint ventures, it is advisable to properly plan the shareholder composition and capital contribution ratio. The following suggestions are worthy of reference:
First, the proportion of foreign capital is greater than that of Chinese capital, which can avoid the control of local shareholders on the company's management rights.
Second, when choosing the partners of the joint venture company in Chinese mainland, we should focus on whether they can provide the business opportunities (raw materials or markets) that the company urgently needs and provide favorable trading conditions for the company, instead of relying on the joint venture company to support local partners.
3. Avoid establishing joint ventures with local partners who can only provide land and factories at fixed prices. Most of these partners overestimate the value of their land and factories, and rely entirely on Taiwan Province's cash equity, making little contribution to the joint venture. Moreover, most of their land is obtained through "administrative allocation" and cannot be mortgaged to banks by joint ventures. Standing in Taiwan Province's position will do more harm than good.
4. If Chinese shareholders have good credit ability, they can use their credit to assist the joint venture company to obtain unsecured credit lines in local banks, thus reducing the financial burden of Taiwan Province shareholders and the joint venture company.
5. Avoid joint ventures with local partners who only provide "special political and business relations". Such shareholders' contribution to the company is limited to the existence of their special relationship. Taiwan Province investors' cash contributions are often easily taken advantage of by companies' privileges, and Taiwan Province shareholders will be controlled by them before making profits. Once their privileges change, they will become a burden to the company.
Investing in mainland institutions with financial institutions.
The participation of financial shareholders has an immediate effect on improving corporate credit. Financial shareholders can come from investment departments of overseas banks, venture capital companies, investment and development companies, etc.
Inviting financial shareholders to participate in joint investment must be a promising business, and the operational ability of managers must be affirmed. As for the current financial structure, it doesn't have to be tough. As long as cash injection can immediately improve the financial situation, financial shareholders can still be invited to join.
The evaluation of financial institutions' participation in investment focuses on "obtaining interest rate" and "how to quit". Because we must share the business risks with the original business owners, we naturally hope to have a better return on investment.
The return on investment of financial institutions comes from surplus distribution and capital appreciation. For example, if you get involved in the first year and quit at the end of the seventh year, for a total of seven years, the dividends (cash and rights issue) distributed, plus the premium from the sale of shares at the end of the period, divided by seven years, if the average annual interest rate is above 20-25%, the return rate is obviously better than that of simple loans.
How to settle accounts after profit is also an important consideration. If you can know in advance that once you reach the original profit target, you can quit smoothly and then invest your money in another case, then financial shareholders will be willing to intervene. If the original business owner is willing to sign some kind of "repurchase contract" with the financial shareholders, or the business entity has a listing plan, it will be easier to increase the willingness of the financial shareholders to intervene.
Although financial institutions have different special preferences according to their investment policies and business strategies, the common feature of * * * is that they are not superstitious about "having made profits" but expect "whether they can make profits in the future". Based on this view, the planned new business is still a hot target if it can make financial shareholders confirm their future profitability.
If the company encounters operational difficulties or crisis > financial crisis.
Under normal circumstances, financial institutions are invited to become shareholders without providing collateral. Since the shareholder is not a creditor, the inviter naturally does not need to provide collateral to become a shareholder. If financial institutions are invited to become shareholders by some kind of "guarantee" or "guaranteed interest rate", or it is agreed to buy back shares at a predetermined price in the future, it is another contractual act. In this case, it is also common to use collateral to ensure its performance ability.
In Hong Kong, there are about 300 to 400 financial institutions whose main business is "venture capital" or "development investment", and most of them have the background of banks or consortia. There are more than 100 such venture capital or development companies in Taiwan Province province, and both domestic banks and foreign banks have departments specializing in direct investment.
Financial institutions have different interests in participating in investment, and each has its own established investment strategy. Some prefer certain countries or regions, some prefer certain industries, some prefer a certain investment scale, and some prefer a certain proportion of capital portfolio.
Generally speaking, financial institutions are reluctant to take large shares, and they are willing to intervene only when the original business owner or the original sponsor has assumed most of the shares, which shows that the operators have considerable sincerity and responsibility. Moreover, if it is a transnational investment case, professional investors will often ask for intervention when the foreign shares are larger than the local shares. For example, the total investment in the mainland is10 million US dollars. If Taiwan Province operators account for 40%, Chinese partners account for 30%, and Hong Kong venture capital funds account for 30%, it is a quite ideal combination.
For financial institutions, venture capital companies or development companies to participate in the investment, its advantages are as follows:
1. Avoid unpleasantness or sequelae caused by peer investment or private investment.
Second, enhance the corporate image, so as to facilitate the recruitment of talents and improve staff morale.
Three, improve its own funds, strengthen the financial structure, and help to obtain bank credit.
Fourth, strengthen management ability and improve the physical fitness of enterprises.
Fifth, stabilize the right to operate.
6. Borrow the experience of financial shareholders, expand opportunities for cross-industry communication, or find reliable partners.
7. Gradually meet the conditions for OTC listing and listing.
Eight, to obtain long-term funds, compared with borrowing, there is no financial pressure to repay the principal and interest.
Most likely to attract financial institutions to become shareholders, usually meet the following conditions:
1. Industries with great development potential in the future, such as computers, information, biochemical technology and automation equipment.
Second, the management team is experienced and has a good reputation.
Third, good management, product and market stability.
4. Insufficient self-owned funds, high debt ratio and heavy interest burden, but the company has a bright future. As long as new capital is injected, the company's profits can be greatly increased.
5. There is a plan to go public, and it is possible to go public.
Inviting financial institutions to become shareholders is mainly to let investors know about the company, especially the uniqueness of the company, and to let financial shareholders know why the investment will be profitable and how to achieve the goal of profitability, so as to be willing to invest money.
Items included in the business plan
Usually, a business plan includes the following:
1. Company profile: date and place of establishment, paid-in capital, business projects, historical evolution, affiliated enterprises and uniqueness compared with other peers.
2. Management team: composed of shareholders, directors and supervisors, key management personnel and key professionals, with special emphasis on their academic experience, professional experience, salary or remuneration and other related positions.
3. Past and estimated business conditions: changes in major business contents, annual turnover, profit and loss and major changes.
4. Fixed assets: office space, factory buildings, land, production equipment and reinvestment.
5. Production and sales value: production capacity, annual output, output value, sales volume and sales amount.
6. Marketing: marketing channels, marketing management, major customers and their trading volume, trading conditions, brands, sales contracts and agents.
Production management: source of raw materials, acquisition methods, main suppliers and their transaction value, transaction conditions, production process, quality control, labor force, outsourcing or OEM.
8. Franchise matters: franchise license, trademark, patent, preference, protection, tax burden, restriction and boycott.
9. Industry analysis: domestic and foreign industry analysis, the company's position and competition analysis in the same industry.
X. R&D: strategy, personnel, capital, management, contract and effectiveness.
XI。 Financial analysis: balance sheet, income statement, cash flow statement, relationship between bank and credit, surplus distribution, capital increase plan.
12. Major plans: foreign investment, factory expansion, company type change, OTC listing, listing and merger.
Thirteen. Analysis of potential problems and ability to cope with difficulties: industry prosperity, horizontal competition, product substitution, operation and management, changes in laws and policies, resources, labor and capital, and dependence on key personnel.
14. This investment proposal: investment amount, type, use, rights and interests of new and old shares. The acquisition of long-term funds comes from two aspects: issuing stocks and borrowing. The former is self-owned funds, while the latter is foreign funds, and their acquisition methods, usage patterns and cost burdens are different. At the beginning of the investment plan, Taiwanese businessmen should carefully consider these two aspects and make proper plans.
Planning and financing points of long-term funds
In terms of issuance, it is necessary to weigh the industry characteristics of investment, operational risks, investor preferences, investment ability, sources of funds, allocation of management rights, cash flow, laws and regulations, tax burden and other factors, and determine the appropriate amount of self-owned capital and the proportion of capital contribution of each shareholder. The source of shareholders can be considered from the following directions:
First, the original promoters in Taiwan Province contributed capital in cash, technology, patents or machinery and equipment.
2. Investors in the upper and lower reaches of the mainland, or investors with private relationships.
3. "Venture capital companies" or "development companies" outside the mainland specialize in enterprise investment.
4. Joint venture partners in the Mainland.
In the aspect of borrowing, it is necessary to comprehensively consider the credit conditions sought by creditors, the borrowing capacity of the institution itself, the future principal and interest cash flow, the impact on the company's financial structure and credit, and the cost of funds generated by borrowing, and then draw up an appropriate loan amount and an exact and feasible repayment plan. The sources of long-term debt are as follows:
1. Long-term loans: you can borrow from financial institutions (such as banks or trust companies), shareholders (shareholders' loans can be converted into capital increase depending on the future business development of the company), counterparties (including royalties or deposits received in advance) and relevant institutions of the mainland government.
2. Issuing corporate bonds: issuing corporate bonds to specific objects or unspecified objects.
3. Long-term payables: for example, project maintenance or machine rental payables.
For the company, the funds raised by public offering are its own funds and belong to "shareholders' equity"; The income from borrowing is foreign capital, which is a "debt item". Both of them have different influences on the company's financial structure, capital use period, debt service pressure, management right distribution and company image. Taiwanese businessmen should plan carefully.
Generally speaking, Taiwanese businessmen prefer sole proprietorship to partnership for fear of possible management problems in the future. However, a wholly-owned enterprise is often limited by the sponsor's own capital contribution ability, or lacks the assistance of entrepreneurial partners in information, funds, corporate credit, business opportunities and so on. , and must meet the needs of the company's business development, it is difficult to smoothly expand the business scale or create profit space.
Unless it is 100% sole proprietorship, when inviting joint ventures, it is advisable to properly plan the shareholder composition and capital contribution ratio. The following suggestions are worthy of reference:
First, the proportion of foreign capital is greater than that of Chinese capital, which can avoid the control of local shareholders on the company's management rights.
Second, when choosing the partners of the joint venture company in Chinese mainland, we should focus on whether they can provide the business opportunities (raw materials or markets) that the company urgently needs and provide favorable trading conditions for the company, instead of relying on the joint venture company to support local partners.
3. Avoid establishing joint ventures with local partners who can only provide land and factories at fixed prices. Most of these partners overestimate the value of their land and factories, and rely entirely on Taiwan Province's cash equity, making little contribution to the joint venture. Moreover, most of their land is obtained through "administrative allocation" and cannot be mortgaged to banks by joint ventures. Standing in Taiwan Province's position will do more harm than good.
4. If Chinese shareholders have good credit ability, they can use their credit to assist the joint venture company to obtain unsecured credit lines in local banks, thus reducing the financial burden of Taiwan Province shareholders and the joint venture company.
5. Avoid joint ventures with local partners who only provide "special political and business relations". Such shareholders' contribution to the company is limited to the existence of their special relationship. Taiwan Province investors' cash contributions are often easily taken advantage of by companies' privileges, and Taiwan Province shareholders will be controlled by them before making profits. Once their privileges change, they will become a burden to the company.
Investing in mainland institutions with financial institutions.
The participation of financial shareholders has an immediate effect on improving corporate credit. Financial shareholders can come from investment departments of overseas banks, venture capital companies, investment and development companies, etc.
Inviting financial shareholders to participate in joint investment must be a promising business, and the operational ability of managers must be affirmed. As for the current financial structure, it doesn't have to be tough. As long as cash injection can immediately improve the financial situation, financial shareholders can still be invited to join.
The evaluation of financial institutions' participation in investment focuses on "obtaining interest rate" and "how to quit". Because we must share the business risks with the original business owners, we naturally hope to have a better return on investment.
The return on investment of financial institutions comes from surplus distribution and capital appreciation. For example, if you get involved in the first year and quit at the end of the seventh year, for a total of seven years, the dividends (cash and rights issue) distributed, plus the premium from the sale of shares at the end of the period, divided by seven years, if the average annual interest rate is above 20-25%, the return rate is obviously better than that of simple loans.
How to settle accounts after profit is also an important consideration. If you can know in advance that once you reach the original profit target, you can quit smoothly and then invest your money in another case, then financial shareholders will be willing to intervene. If the original business owner is willing to sign some kind of "repurchase contract" with the financial shareholders, or the business entity has a listing plan, it will be easier to increase the willingness of the financial shareholders to intervene.
Although financial institutions have different special preferences according to their investment policies and business strategies, the common feature of * * * is that they are not superstitious about "having made profits" but expect "whether they can make profits in the future". Based on this view, the planned new business is still a hot target if it can make financial shareholders confirm their future profitability.
If the company encounters operational difficulties or crisis > financial crisis.
Under normal circumstances, financial institutions are invited to become shareholders without providing collateral. Since the shareholder is not a creditor, the inviter naturally does not need to provide collateral to become a shareholder. If financial institutions are invited to become shareholders by some kind of "guarantee" or "guaranteed interest rate", or it is agreed to buy back shares at a predetermined price in the future, it is another contractual act. In this case, it is also common to use collateral to ensure its performance ability.
In Hong Kong, there are about 300 to 400 financial institutions whose main business is "venture capital" or "development investment", and most of them have the background of banks or consortia. There are more than 100 such venture capital or development companies in Taiwan Province province, and both domestic banks and foreign banks have departments specializing in direct investment.
Financial institutions have different interests in participating in investment, and each has its own established investment strategy. Some prefer certain countries or regions, some prefer certain industries, some prefer a certain investment scale, and some prefer a certain proportion of capital portfolio.
Generally speaking, financial institutions are reluctant to take large shares, and they are willing to intervene only when the original business owner or the original sponsor has assumed most of the shares, which shows that the operators have considerable sincerity and responsibility. Moreover, if it is a transnational investment case, professional investors will often ask for intervention when the foreign shares are larger than the local shares. For example, the total investment in the mainland is10 million US dollars. If Taiwan Province operators account for 40%, Chinese partners account for 30%, and Hong Kong venture capital funds account for 30%, it is a quite ideal combination.
For financial institutions, venture capital companies or development companies to participate in the investment, its advantages are as follows:
1. Avoid unpleasantness or sequelae caused by peer investment or private investment.
Second, enhance the corporate image, so as to facilitate the recruitment of talents and improve staff morale.
Three, improve its own funds, strengthen the financial structure, and help to obtain bank credit.
Fourth, strengthen management ability and improve the physical fitness of enterprises.
Fifth, stabilize the right to operate.
6. Borrow the experience of financial shareholders, expand opportunities for cross-industry communication, or find reliable partners.
7. Gradually meet the conditions for OTC listing and listing.
Eight, to obtain long-term funds, compared with borrowing, there is no financial pressure to repay the principal and interest.
Most likely to attract financial institutions to become shareholders, usually meet the following conditions:
1. Industries with great development potential in the future, such as computers, information, biochemical technology and automation equipment.
Second, the management team is experienced and has a good reputation.
Third, good management, product and market stability.
4. Insufficient self-owned funds, high debt ratio and heavy interest burden, but the company has a bright future. As long as new capital is injected, the company's profits can be greatly increased.
5. There is a plan to go public, and it is possible to go public.
Inviting financial institutions to become shareholders is mainly to let investors know about the company, especially the uniqueness of the company, and to let financial shareholders know why the investment will be profitable and how to achieve the goal of profitability, so as to be willing to invest money.
Items included in the business plan
Usually, a business plan includes the following:
1. Company profile: date and place of establishment, paid-in capital, business projects, historical evolution, affiliated enterprises and uniqueness compared with other peers.
2. Management team: composed of shareholders, directors and supervisors, key management personnel and key professionals, with special emphasis on their academic experience, professional experience, salary or remuneration and other related positions.
3. Past and estimated business conditions: changes in major business contents, annual turnover, profit and loss and major changes.
4. Fixed assets: office space, factory buildings, land, production equipment and reinvestment.
5. Production and sales value: production capacity, annual output, output value, sales volume and sales amount.
6. Marketing: marketing channels, marketing management, major customers and their trading volume, trading conditions, brands, sales contracts and agents.
Production management: source of raw materials, acquisition methods, main suppliers and their transaction value, transaction conditions, production process, quality control, labor force, outsourcing or OEM.
8. Franchise matters: franchise license, trademark, patent, preference, protection, tax burden, restriction and boycott.
9. Industry analysis: domestic and foreign industry analysis, the company's position and competition analysis in the same industry.
X. R&D: strategy, personnel, capital, management, contract and effectiveness.
XI。 Financial analysis: balance sheet, income statement, cash flow statement, relationship between bank and credit, surplus distribution, capital increase plan.
12. Major plans: foreign investment, factory expansion, company type change, OTC listing, listing and merger.
Thirteen. Analysis of potential problems and ability to cope with difficulties: industry prosperity, horizontal competition, product substitution, operation and management, changes in laws and policies, resources, labor and capital, and dependence on key personnel.
14. This investment proposal: investment amount, type, use, rights and interests of new and old shares.