Explain implications to the company capital structure

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The Exceptional Service Grading Company requires a capital infusion of $500,000. It is currently a closely held corporation with less than 25 shareholders. Although the shareholders are not all related to each other, they all know each other, and they view the business as a family business.

Several alternatives are available to the company, consisting of the following:

  • Obtain private debt financing
  • Seek out a private investor(s) who would be willing to share ownership (private transfer of partial ownership)
  • Seek out offers for a private buy-out (private transfer of entire ownership)
  • Issue public debt (corporate bonds)
  • Issue public common stock (public equity offering)

Question 1: Briefly discuss each alternative and include implications to the company's capital structure and cost of capital, if any. Considering the size of the investment ($500,000 infusion), provide a conclusion on how it might impact the financial statement.

Reference no: EM132573322

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