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Chapter 15 Raising Capital and Capital Structure

PLEASE NOTE: This book is currently in draft form; material is not final.

“Give me a lever…”

PLEASE NOTE: This book is currently in draft form; material is not final.

Give me a lever long enough and a place to stand, and I shall move the world.

Archimedes

Archimedes may have been explaining the power of physical levers, but his sentiment is just as apropos when discussing leverage caused by employing debt to finance companies. A little leverage is a powerful thing, and companies with access to debt capital can utilize it to grow a spark of income into an inferno of profitability. With debt, however, comes risk, and a capital structure that might work for one firm might be perilous for another. Even the same company, throughout its lifespan, can have different needs and access to capital markets.