Entrepreneurial Finance 7th Edition by J. Chris Leach, ISBN-13: 978-0357442043

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Entrepreneurial Finance 7th Edition by J. Chris Leach, ISBN-13: 978-0357442043

[PDF eBook eTextbook]

• Publisher: ‎ Cengage Learning; 7th edition (March 9, 2020)
• Language: ‎ English
• ISBN-10: ‎ 0357442040
• ISBN-13: ‎ 978-0357442043

Master each step of the complete “life cycle” of a firm with Leach/Melicher’s ENTREPRENEURIAL FINANCE, 7E. This edition vividly explains the theories, corporate finance tools and techniques you need to start, build and eventually harvest a successful entrepreneurial venture today. Using an inviting presentation, this book emphasizes sound financial management practices as you learn how to secure financing, use business cash flow models and strategically position your early-stage company. You also learn to interact effectively with financial institutions and regulatory agencies that can impact venture growth and ensure liquidity for investors. Updates throughout this edition feature real examples as well as in-depth capstone cases and mini-cases drawn from actual entrepreneurial ventures and common financial scenarios. Strengthen your entrepreneurial skills as you study key concepts, such as venture capital funds, clean tech, sustainable sales growth, strategic alliances, licensing agreements and exit strategies.

Table of Contents:

Brief Contents

Contents

Preface

About the Authors

PART 1: The Entrepreneurial Environment

CHAPTER 1: Introduction to Finance for Entrepreneurs

1.1 The Entrepreneurial Process

1.2 Entrepreneurship Fundamentals

1.3 Sources of Entrepreneurial Opportunities

1.4 Principles of Entrepreneurial Finance

1.5 Role of Entrepreneurial Finance

1.6 The Successful Venture Life Cycle

1.7 Financing Through the Venture Life Cycle

1.8 Life Cycle Approach for Teaching Entrepreneurial Finance

CHAPTER 2: Developing the Business Idea

2.1 Process for Identifying Business Opportunities

2.2 To be Successful, You Must Have a Sound Business Model

2.3 Learn from the Best Practices of Successful Entrepreneurial Ventures

2.4 Time-to-Market and Other Timing Implications

2.5 Initial “Litmus Test” for Evaluating the Business Feasibility of an Idea

2.6 Screening Venture Opportunities

2.7 Key Elements of a Business Plan

Appendix A Applying the VOS Indicator™: An Example

PART 2: Organizing and Operating the Venture

CHAPTER 3: Organizing and Financing a New Venture

3.1 Progressing Through the Venture Life Cycle

3.2 Forms of Business Organization

3.3 Choosing the Form of Organization: Tax and Other Considerations

3.4 Intellectual Property

3.5 Seed, Startup, and First-Round Financing Sources

CHAPTER 4: Preparing and Using Financial Statements

4.1 Obtaining and Recording the Resources Necessary to Start and Build a New Venture

4.2 Business Assets, Liabilities, and Owners’ Equity

4.3 Sales, Expenses, and Profits

4.4 Internal Operating Schedules

4.5 Statement of Cash Flows

4.6 Operating Breakeven Analyses

Appendix A NOPAT Breakeven: Revenues Needed to Cover Total Operating Costs

CHAPTER 5: Evaluating Operating and Financial Performance

5.1 Users of Operating and Financial Performance Measures by Life Cycle Stage

5.2 Using Financial Ratios

5.3 Cash Burn Rates and Liquidity Ratios

5.4 Leverage Ratios

5.5 Profitability and Efficiency Ratios

5.6 Industry Comparable Ratio Analysis

5.7 A Hitchhiker’s Guide to Financial Analysis

PART 3: Planning for the Future

CHAPTER 6: Managing Cash Flow

6.1 Financial Planning throughout the Venture’s Life Cycle

6.2 Surviving in the Short Run

6.3 Short-Term Cash-Planning Tools

6.4 Projected Monthly Financial Statements

6.5 Cash Planning from a Projected Monthly Balance Sheet

6.6 Conversion Period Ratios

CHAPTER 7: Types and Costs of Financial Capital

7.1 Implicit and Explicit Financial Capital Costs

7.2 Financial Markets

7.3 Determining the Cost of Debt Capital

7.4 What is Investment Risk

7.5 Estimating the Cost of Equity Capital

7.6 Weighted Average Cost of Capital

Appendix A Using WACC to Complete the Calibration of EVA

CHAPTER 8: Securities Law Considerations When Obtaining Venture Financing

8.1 Review of Sources of External Venture Financing

8.2 Overview of Federal and State Securities Laws

8.3 Process for Determining Whether Securities Must be Registered

8.4 Registration of Securities Under the Securities Act of 1933

8.5 Security Exemptions from Registration Under the 1933 Act

8.6 Transaction Exemptions from Registration Under the 1933 Act

8.7 SEC’s Regulation D: Safe-Harbor Exemptions

8.8 Regulation a Security Exemption

8.9 JOBS Act Innovations

Appendix A Schedule A (Securities Act of 1933, as Amended)

Appendix B Selected SEC Regulation D Materials

Appendix C Other Forms of Registration Exemptions and Breaks

PART 4: Creating and Recognizing Venture Value

CHAPTER 9: Projecting Financial Statements

9.1 Long-Term Financial Planning Throughout the Venture’s Life Cycle

9.2 Beyond Survival: Systematic Forecasting

9.3 Estimating Sustainable Sales Growth Rates

9.4 Estimating Additional Financing Needed to Support Growth

9.5 Percent-of-Sales Projected Financial Statements

CHAPTER 10: Valuing Early-Stage Ventures

10.1 What is a Venture Worth?

10.2 Basic Mechanics of Valuation: Mixing Vision and Reality

10.3 Required versus Surplus Cash

10.4 Developing the Projected Financial Statements for a DCF Valuation

10.5 Just-In-Time Equity Valuation: Pseudo Dividends

10.6 Accounting versus Equity Valuation Cash Flow

CHAPTER 11: Venture Capital Valuation Methods

11.1 Brief Review of Basic Cash Flow-Based Equity Valuations

11.2 Basic Venture Capital Valuation Method

11.3 Earnings Multipliers and Discounted Dividends

11.4 Adjusting VCSCs for Multiple Rounds

11.5 Adjusting VCSCs for Incentive Ownership

11.6 Adjusting VCSCs for Payments to Senior Security Holders

11.7 Introducing Scenarios to VCSCs

PART 5: Structuring Financing for the Growing Venture

CHAPTER 12: Professional Venture Capital

12.1 Historical Characterization of Professional Venture Capital

12.2 Professional Venture Investing Cycle: Overview

12.3 Determining (Next) Fund Objectives and Policies

12.4 Organizing the New Fund

12.5 Soliciting Investments in the New Fund

12.6 Obtaining Commitments for a Series of Capital Calls

12.7 Conducting Due Diligence and Actively Investing

12.8 Arranging Harvest or Liquidation

12.9 Distributing Cash and Securities Proceeds

CHAPTER 13: Other Financing Alternatives

13.1 Business Incubators, Seed Accelerators, and Intermediaries

13.2 Business Crowdsourcing and Crowdfunding

13.3 Commercial and Venture Bank Lending

13.4 Understanding Why You May not Get Debt Financing

13.5 Credit Cards

13.6 Foreign Investor Funding Sources

13.7 Small Business Administration Programs

13.8 Other Government Financing Programs

13.9 Factoring, Receivables Lending, and Customer Funding

13.10 Debt, Debt Substitutes, and Direct Offerings

Appendix A Summary of Colorado Business Financial Assistance Options

CHAPTER 14: Security Structures and Determining Enterprise Values

14.1 Common Stock or Common Equity

14.2 Preferred Stock or Preferred Equity

14.3 Convertible Debt

14.4 Warrants and Options

14.5 Other Concerns About Security Design

14.6 Valuing Ventures with Complex Capital Structures: The Enterprise Method

PART 6: Exit and Turnaround Strategies

CHAPTER 15: Harvesting the Business Venture Investment

15.1 Venture Operating and Financial Decisions Revisited

15.2 Planning an Exit Strategy

15.3 Valuing the Equity or Valuing the Enterprise

15.4 Systematic Liquidation

15.5 Outright Sale

15.6 Going Public

CHAPTER 16: Financially Troubled Ventures: Turnaround Opportunities

16.1 Venture Operating and Financing Overview

16.2 The Troubled Venture and Financial Distress

16.3 Resolving Financial Distress Situations

16.4 Private Workouts and Liquidations

16.5 Federal Bankruptcy Law

PART 7: Capstone Cases

CASE 1: Eco-Products, Inc

CASE 2: Spatial Technology, Inc

Glossary

Index

J. Chris Leach is the W.W. Reynolds Capital Markets Chair and the former Robert H. and Beverly A. Deming Professor in Entrepreneurship at the Leeds School of Business within University of Colorado at Boulder. Dr. Leach received his Ph.D. in finance from Cornell University and began his teaching career at the Wharton School. He has served as a visiting professor at Carnegie Mellon, the Indian School of Business and the Stockholm Institute for Financial Research (at the Stockholm School of Economics). His teaching experience includes courses for undergraduates, M.B.A. and Ph.D. students, and executives. A former Graduate Professor of the Year, Dr. Leach has received multiple awards for M.B.A. teaching excellence. Dr. Leach’s research on a variety of topics has been published in The Review of Financial Studies; Journal of Financial and Quantitative Analysis; Journal of Business; Journal of Accounting; Auditing and Finance; Review of Economic Dynamics and Journal of Money, Credit and Banking. His business background includes various startups dating back to the 1970s. He has also consulted in areas of business and strategic planning advising, valuation and deal structure for early-stage and small businesses. He is a faculty sponsor for M.B.A. teams that have qualified for twelve international championships for the Venture Capital Investment Competition, and he is a faculty advisor for the Deming Center Venture Fund.

Ronald W. Melicher is Professor Emeritus of Finance in the Leeds School of Business at the University of Colorado at Boulder. He earned his undergraduate, M.B.A. and Ph.D. from Washington University in St. Louis, Missouri. While at the University of Colorado, he received several distinguished teaching awards and was designated as a university-wide President’s Teaching Scholar. A former president of the Financial Management Association, Dr. Melicher has taught entrepreneurial finance at M.B.A. and undergraduate levels, corporate finance and financial strategy in M.B.A. and Executive M.B.A. programs and investment banking to undergraduate students. While on sabbatical leave from the University of Colorado, he taught at the INSEAD Graduate School of Business in Fontainebleau, France, and at the University of Zurich in Switzerland. He has delivered numerous university-offered executive education non-credit courses and has taught in-house finance education materials for IBM and other firms. Dr. Melicher has given expert witness testimony on cost of capital in regulatory proceedings and provided consulting expertise in the areas of financial management and firm valuation. Focusing on mergers and acquisitions, corporate restructurings and the financing and valuation of early-stage firms, his research has been published in such major journals as the Journal of Finance, Journal of Financial and Quantitative Analysis and Financial Management. In addition, he is the co-author of INTRODUCTION TO FINANCE: MARKETS, INVESTMENTS, AND FINANCIAL MANAGEMENT.

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