What is Corporate Finance?
Corporate Finance is a broad term relating to the process of allocating new funds to a business for a variety of reasons, such as company acquisitions or the financing of future company growth. Capital investment can be raised in a number of ways, including private equity investors or the use of investment banks.
3 Pillars Of Corporate Financing
What is Capital Budgeting?
Capital budgeting is also known as an investment appraisal. This is the process of choosing new proposed capital projects and investments that add the most value to a company. An investment example could include new premises for your business. Capital budgeting will allow corporate finance companies to weigh up whether the cash flow and outgoings of that project is the best use of the businesses capital budget.
What is Capital Structure?
Let us use acquisition as an example. When corporate finance is issued, the capital structure can be referred to as the debt to equity ratio. Corporate finance firms will decide how much of their own funds they will issue and how much they will issue borrowed funds. For example, a business needs corporate finance to acquire another company for £1 million, so the firm may provide £200,000 in equity and £800,000 in debt. This structure may change depending on the deal and the firm’s desired capital structure.
Working Capital Management
What is Working Capital Management?
Working capital management is the focus on a company balance sheet, assessing the cash flow into the business, the reasons cash is going out, and whether the business is running at maximum efficiency while avoiding any commercial issues. By effectively managing working capital, the business can ensure excess cash is not tied up and therefore may reduce the need for borrowing external capital and taking on too much debt.
If capital management is proving difficult in your business then it may be worth seeking expertise around corporate cash flow solutions.
Corporate Finance Company Hertfordshire
Primary Asset Finance is part of the Primary Finance Group. We provide a full range of corporate and customer finance services. If your Hertfordshire or London-based business is experiencing growth and is in need of cash flow funding or asset finance, we can provide funding and advice quickly.
Conversely, if your company is going through a challenging time and is in need of expertise around debt solutions, please contact our friendly team today to assess the best corporate finance solutions for you.