Equity financing

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The equity financing is (deposit funding) the supply of equity by the or the shareholders , with the funds the company accrue from outside. Equity financing is therefore both internal and external financing . It always takes place when the company is founded , but also later in the context of capital increases .

Equity financing means are cash contributions , contributions in kind and rights . The last two points, however, usually cause valuation problems.

There are two options with regard to the people who raise the equity :

  • The previous shareholders increase their contribution and / or
  • new shareholders join the group of previous shareholders through their contribution.

In the case of equity financing, the capital providers generally have a right to claim profits , assets and liquidation proceeds . Furthermore, they are co-bearers of the corporate risk, which, depending on the legal form, can also be limited to the amount of the deposit. In addition, the financiers obtain information, participation and codecision rights. The capital lease period is generally long-term, but can also be short-term in the case of sole proprietorships and partnerships (depending on the contract design).

Equity financing in public companies

In the case of stock corporations , the amount of equity financing is calculated from the sum of the subscribed capital and the capital reserve .

See also

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