1. Types of Transactions
One of the things to keep in mind is that there are six
basic types of transactions that a company can engage in. The first type
would be an initial public offering or an IPO.
This is when the company issues equity in the form of shares to
the public for the first time. After an IPO or initial public offering,
the company could do a follow on offering. This would be when the
company wants to issue more equity to public shareholders.
Now, while a follow on offering would be open and available to any
public shareholders, the company may choose to do a private placement where
it would be issuing shares only to a select group of shareholders.
Now, the first three types of transactions involve the company seeking forms
of financing. But we can also look at mergers and acquisitions,
or M&A and this is where the company would look for other companies
to possibly invest in. Another form of financing which could be available
to the company is a leveraged buyout, and this is where a private
equity firm may be interested in taking a position or completely acquiring
the company. And finally, the company may look at divestiture, so the company
may put itself up for sale and look for possible companies which would
be interested in purchasing it.
2. Let's practice!