Higher Education

Entrepreneurial Finance, 4th Edition

  • J. Chris Leach University of Colorado at Boulder
  • Ronald W. Melicher University of Colorado at Boulder
  • ISBN-10: 0538478152  |  ISBN-13: 9780538478151
  • 688 Pages
  • Previous Editions: 2009, 2006, 2003
  • © 2012 | Published
  • College Bookstore Wholesale Price = $247.25
  • Newer Edition Available
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About

Overview

Show your students how to apply today’s most effective corporate finance tools and techniques to their own entrepreneurial ventures with Leach/Melicher’s ENTREPRENEURIAL FINANCE, 4E. This accessible, reader-friendly edition closely follows a “life cycle of the firm” approach as it introduces the theories, knowledge, and financial tools an entrepreneur needs to start, build, and eventually harvest a successful venture. This edition clearly focuses on sound financial management practices, showing students how and where to obtain the financial capital necessary to run and grow a venture. This edition explores the most important financial issues that entrepreneurs face, particularly the stages of financing, business cash flow models, and strategic positioning of the early-stage company. Students gain the knowledge to interact successfully with financial institutions and the regulatory agencies that are central to financing ventures as they grow and, ultimately, look for liquidity for their investors. A new capstone case and updated mini-cases, as well as engaging entrepreneurial ventures lifted from the latest headlines keep students involved and learning as they examine concepts such as venture capital funds, institutional investors, and strategic alliances. This edition also provides your student with a thorough understanding of the role of business angels, licensing agreements, and exit strategies. Trust ENTREPRENEURIAL FINANCE, 4E to provide the knowledge and skills today’s students need for entrepreneurial success.

Features and Benefits

  • THREE CAPSTONE CASES PROVIDE OPPORTUNITIES FOR STUDENTS TO SYNTHESIZE THE TEXT’S MATERIAL. With this edition’s significant coverage, three proven capstone cases offer important opportunities to integrate and apply the numerous concepts students have learned. New case, Eco-Products, Inc. represents a company that produces and sells environmentally sound food service products from renewable resources.
  • NEW “FROM THE HEADLINES” FEATURE IN EACH CHAPTER HIGHLIGHT INTRIGUING ENTREPRENEURIAL VENTURES. Students see chapter content put into practice as each entrepreneurial venture relates to concepts presented within the chapter. Corresponding new “Discussion Questions” conclude each chapter and demonstrate to students what they have learned.
  • WEALTH OF END-OF-CHAPTER MATERIALS PROVIDES SIGNIFICANT OPPORTUNITIES TO APPLY CONCEPTS. Each chapter concludes with a Chapter Summary, Key Terms, Discussion Questions, Internet Activities, Exercises and Problems as well as Supplemental Exercises and Mini Cases to give you and your students a significant choice of applications.
  • INSTRUCTOR MATERIALS you need to enhance your teaching experience and reduce preparation time are available on the companion website. The dynamic author-written Instructor’s Manual includes short answers to end-of-chapter questions and answers to end-of-chapter problems, while this edition’s Test Bank provides proven true/false and multiple-choice questions as well as short test problems. PowerPoint® lecture slides further reinforce concepts and exhibits from the text. Your students further save time as they work with supplementary Excel® spreadsheet models that correspond with specific text chapters.

Table of Contents

PART I: BACKGROUND AND ENVIRONMENT.
1. Introduction and Overview.
2. From the Idea to the Business Plan.
PART II: ORGANIZING AND OPERATING THE VENTURE.
3. Organizing and Financing a New Venture.
4. Measuring Financial Performance.
5. Evaluating Financial Performance.
PART III: PLANNING FOR THE FUTURE.
6. Financial Planning: Short Term and Long Term.
7. Types and Costs of Financial Capital.
8. Securities Law Considerations When Obtaining Venture Financing.
PART IV: CREATING AND RECOGNIZING VENTURE VALUE.
9. Valuing Early-Stage Ventures.
10. Venture Capital Valuation Methods.
PART V: STRUCTURING FINANCING FOR THE GROWING VENTURE.
11. Professional Venture Capital.
12. Other Financing Alternatives.
13. Security Structures and Determining Enterprise Values.
PART VI: EXIT AND TURNAROUND STRATEGIES.
14. Harvesting the Business Venture Investment.
15. Financially Troubled Ventures: Turnaround Opportunities?
PART VII: CAPSTONE CASES.
Case 1 Eco-Products, Inc.
Case 2 Coral Systems, Inc.
Case 3 Spatial Technology, Inc.

What's New

  • CURRENT, UP-TO-THE-MINUTE COVERAGE HELPS YOU ADDRESS TODAY’S MOST RECENT FINANCIAL DEVELOPMENTS. This edition offers some of the most current information and developments available for this course, enabling you to prepare your students with the latest financial tools and knowledge.
  • NEW DISCUSSION HIGHLIGHTS THE SPECIFICS AND ENTREPRENEURIAL OPPORTUNITIES PRESENTED WITH THE 2007-2009 FINANCIAL AND ECONOMIC CRISIS. Students examine the financial crises, resulting entrepreneurial venture opportunities and effective methods for dealing with tighter capital.
  • NEW “FROM THE HEADLINES” FEATURE IN EACH CHAPTER HIGHLIGHT INTRIGUING ENTREPRENEURIAL VENTURES. Students see chapter content put into practice as each entrepreneurial venture relates to concepts presented within the chapter. Corresponding new “Discussion Questions” conclude each chapter and demonstrate to students what they have learned.
  • NEW CAPSTONE CASE PROMPTS STUDENTS TO MAKE EARLY-STAGE SOUND FINANCING DECISIONS. This edition’s new capstone case features Eco-Products, Inc., a company that produces and sells environmentally sound food service products from renewable resources. Students make early-stage financing decisions, including raising funds through a private placement memorandum, and handling a proposed private placement with an investment firm utilizing a term sheet. Useful excerpts from the private placement memorandum and term sheet allow you to guide student review and analysis.
  • NEW PEDAGOGICAL DESCRIPTIONS BEFORE EACH EXERCISE OR PROBLEM OFFER STUDENTS VALUABLE GUIDANCE. Each end-of-chapter exercise or problem is now preceded by a brief, italicized description that directs students to the key content or focus of the exercise or problem. In addition, all problems and mini-cases throughout this edition reflect contemporary dates and timelines.
  • SUBSTANTIALLY REWRITTEN “INTRODUCTION AND OVERVIEW” (CH. 1) NOW REFLECTS TODAY’S FOCUS ON ENVIRONMENTALLY FRIENDLY PRODUCTS. Students become familiar with “clean tech” and “clean energy” potential applications as well as entrepreneurial venture opportunities related to environmentally friendly products.
  • UPDATED PERSONAL AND CORPORATE INCOME TAX INFORMATION REFLECTS THE LATEST CHANGES. Chapter discussion guides students through effectively organizing and financing a new venture (Ch.3) with fresh, contemporary references and information.
  • IMPROVED CLARITY OF CASH BURN DISCUSSION. (CH. 5) with the addition of new financial ration problems and restructured minicase.
  • ADDED PROBLEM MATERIALS ON SUSTAINABLE SALES GROWTH RATES AND ADDITIONAL FUNDS NEEDED. (CH. 6)
  • REORGANIZED CHAPTER ON VALUING EARLY-STAGE VENTURES (CH. 9) IS NOW CONSOLIDATED FOR CLEARER UNDERSTANDING OF FREE CASH FLOW VALUATION METHODS. Concept is supported by restructured end of chapter minicase.
  • SUBSTANTIALLY REWRITTEN SECTION ON “VALUING VENTURES WITH COMPLEX CAPITAL STRUCTURES NOW FOCUSES ON THE ENTERPRISE METHOD. This coverage (CH.13) presents the method consistent with Chapter 9’s streamlined coverage. An alternative enterprise valuation method now presented as a Learning Supplement to the chapter.
  • NEW COVERAGE OF “EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS) FAMILIARIZES STUDENTS WITH THIS OPTION. Updates to “Post-IPO Trading” (Ch. 14) also now reflect current NYSE and Nasdaq listing requirements data.

Efficacy and Outcomes

Reviews

“I have a strong preference for your text. You have better examples and cover more relevant content.”

— Robert M. Patterson, CFA, Westminster College

“I like content; I like the finance involved and I like valuation which is so necessary for this class.”

— Srinivasan Sundaram, Ball State/Miller College

Meet the Author

Author Bio

J. Chris Leach

J. Chris Leach is Professor of Finance and the Robert H. and Beverly A Deming Professor in Entrepreneurship at the Leeds School of Business, University of Colorado at Boulder. He received a finance Ph.D. from Cornell University, began his teaching career at the Wharton School, and has been a visiting professor at Carnegie Mellon, the Indian School of Business, and the Stockholm Institute for Financial Research (at the Stockholm School of Economics). His teaching experience includes courses for undergraduates, MBAs, Ph.D. students, and executives. A former Graduate Professor of the Year, he has received multiple awards for MBA Teaching Excellence. Dr. Leach's research on a variety of topics has been published in THE REVIEW OF FINANCIAL STUDIES, JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS, JOURNAL OF BUSINESS, JOURNAL OF ACCOUNTING, AUDITING AND FINANCE, REVIEW OF ECONOMIC DYNAMICS, and JOURNAL OF MONEY, CREDIT AND BANKING, among others. His business background includes various startups dating back to his early teens in the 1970s. During his transition to the University of Colorado, he was chairman of a New Mexico startup and later participated as an investor and advisor in a late-1990s Silicon Valley startup that subsequently merged into a public company. Dr. Leach's consulting activities include business and strategic planning advising, valuation, and deal structure for early stage and small businesses. In addition, he is a member of the Deming Center board of directors and a faculty advisor for the Deming Center Venture Fund, where his MBA teams have qualified for nine international championships for the Venture Capital Investment Competition.

Ronald W. Melicher

Ronald W. Melicher is Professor Emeritus of Finance in the Leeds School of Business at the University of Colorado at Boulder. He earned his undergraduate, MBA, and doctoral degrees from Washington University in St. Louis, Missouri. While at the University of Colorado, he received several distinguished teaching awards and was designated as a university-wide President's Teaching Scholar. A former president of the Financial Management Association, Dr. Melicher has taught entrepreneurial finance at MBA and undergraduate levels, corporate finance and financial strategy in MBA and Executive MBA programs, and investment banking to undergraduate students. While on sabbatical leave from the University of Colorado, he taught at the INSEAD Graduate School of Business in Fontainebleau, France, and at the University of Zurich in Switzerland. He has delivered numerous university-offered executive education non-credit courses and has taught in-house finance education materials for IBM and other firms. Dr. Melicher has given expert witness testimony on cost of capital in regulatory proceedings and provided consulting expertise in the areas of financial management and firm valuation. Focusing on mergers and acquisitions, corporate restructurings, and the financing and valuation of early-stage firms, his research has been published in such major journals as the JOURNAL OF FINANCE, JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS, and FINANCIAL MANAGEMENT. In addition, he is the co-author of INTRODUCTION TO FINANCE: MARKETS, INVESTMENTS, AND FINANCIAL MANAGEMENT, 15e (John Wiley & Sons, 2014).