After you strip away all the complexity of risk assessments, negotiations, due diligence, legal documents, and the rest of the brouhaha surrounding financing transactions, at their core they are no different from all other commercial transactions—barter to be more precise—with money taking a role of a commodity rather than a medium. On one side of the deal, there are the deep pockets with funds they want to gainfully exchange for something; on the other side, there are entities in need of capital, prepared to acquire it by giving something up. This money-purchasing essence is clearly reflected in the translation of financing activities into accounting events: no matter where the credit goes, you debit, even if for a split second, the most current of your assets: cash.
KeywordsVenture Capital Private Equity Capital Financing Credit Line Private Equity Fund
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