For this week, provide an answer to the case study questions with a recommendation.
Case Study
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. The financial statements should be familiar to you because you performed a basic financial analysis of the company in Unit 1 of this course.
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)
Briefly discuss each alternative and include implications to the companys 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 reviewed in Unit 1. No calculations are required.
Your Discussion should be not more than 1000 words. Please include a word count. Following the APA standard, use references and in-text citations for the textbook and any other sources.
All course textbooks are accessible through the Syllabus or through the course’s “Textbook” page. Any additional, non-textbook Reading Assignments will provide text access/location information below.
1. Blanding, M. (2020, January 13). Do private equity buyouts get a bad rap? Harvard Business School. Retrieved from
2. Chen, J. (2021, March 18). Debt financing. Investopedia. Retrieved from
3. Chron Contributor. (2020, November 23). How does the corporate tax rate affect WACC? CHRON. Retrieved from
4. Chron Contributor. (2020, August 10). Pros & cons of issuing common stock. CHRON. Retrieved from
4. Cremades, A (2019, January 2). 8 Types of investors for startups. Forbes. Retrieved from
5. Corporate Finance Institute. (2018, June 14). What is an LBO: Leveraged buyout. . YouTube. Retrieved from
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