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Transactions:
Transactions can occur in cash, in equity with a fixed share or fixed value agreement, or as a combination. A cash offer provides a known value, limits dilution, creates immediate tax liability and is often made at a discount to an all-stock deal. A stock offer generally carries an unknown value, postpones tax liability, is dilutive and often carries a premium to an all-cash deal. Collar agreements and material adverse effect clauses are often used to mitigate some of the risk inherent in these transactions.
It remains important to remember that because we tend to value those metrics we can measure most accurately, we are often precisely wrong rather than approximately right. Ultimately, the value of a firm is a function of three variables—its capacity to generate cash flows, its expected growth in these cash flows, and the uncertainty associated with these cash flows.
Everything that can be counted does not necessarily count, and everything that counts cannot necessarily be counted.
Mazakali helps companies raise capital and investors place capital. Decades of legal and financial experience guide our values and vision. The Mazakali Green Paper™ is an authoritative and concise report on deep trends in the industry that matter to investors and entrepreneurs alike. Securities offered through SeedChange Execution Services, Inc. Member FINRA/SIPC.