This note provides an overview of the deal structuring process between company founders and venture capital firms. Specifically, the note: (1) reviews the use of the venture capital method to value venture investment opportunities and structure the financing arrangement between the founders of...

Our objective in this paper is to provide a pedagogical discussion of the process by which creditors take control of distressed firms. Distress or vulture investing requires a high level of business acumen combined with deep knowledge of accounting, finance, and corporate and restructuring law....

Entrepreneurs who deal with a venture capital firm (VC) for the first time often find themselves unprepared for the experience. The financing terms (deal structure), which specify the percentage of the firm's common stock that goes to the VC often require that the entrepreneur forfeit a large...

Dramatic claims have been made about the effect of shale gas discoveries in the continental U.S. on the country's energy needs. However, several industry experts question the estimated volume of recoverable reserves as well as the economic viability of producing them at current market prices for...

A widely cited survey of financial executives reported that more than 50% of the surveyed companies used a single, company-wide discount rate to evaluate all investment proposals. The shortcomings of this approach are well known and reported in virtually every introductory finance text. Yet...

Pete Carvey, CFO for the PKO Resources of McKinney, TX sat at his desk puzzling over the analysis just presented to him regarding an acquisition his firm was considering. Although this project seemed like hundreds of others that he had analyzed, Pete was bothered by three things: First, the...

James Kingsley, a financial analyst for Progressive Exploration and Development Company, has been asked to join a team that will analyze the possible acquisition of a sizable oil field in southeastern Oklahoma. To prepare for the task Mr. Kingsley constructs a spreadsheet model of the economic...

In this paper, we develop and test a model of optimal incentive compensation that incorporates consideration for the role of both competition and cooperation among the firm's top executives. Our model highlights the effects of firm risk on the relative importance of cooperative versus...

We examine Enron's collapse to provide insights as to the efficacy of recent governance reforms. In doing so, we explore two main issues. First, if recently mandated governance changes had been in place earlier, would they have constrained actions by Enron's management? Second, and more...

We examine the potential expropriation of a firm's intellectual capital that results from joint venture agreements when a firm's joint venture partner becomes the target of an acquisition attempt. We find that: (1) non-targeted joint venture partners often suffer losses in value upon the...