Clariton Antiques Ltd have just been approached by'We Finance Limited', a venture capital organisation, with an offer to finance their expansion by offering the full 0.5m for a 20% stake in the business.
Alternatively they can use the services of a finance broker to obtain a bank loan. The broker will charge a 1% fee on the amount secured and interest on the loan would be 2% APR payable over 10 years.
You are required to:
2.2 Explain the importance of financial planning for Clariton Antiques Ltd wift reference to;
a) budgeting
b) implications of failure to finance adequately
c) overtrading
2.3 Give an assessment of the information that will be needed to make decision on financing the takeover by;
a) The Partners
b) Venture capitalist [We Finance Limited)
c) Finance broker