Business Financing Process by plx61116


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           D.J. MASSON

           MBAM 629.12


        FALL 2005 – B-TERM


          8:00 A.M. – NOON


                                   MBAM 629.12
                                FALL 2005 – B TERM

Tuesdays, 8:00 a.m. – Noon
Malibu Campus

Professor:            D.J. Masson
Office address:       6100 Center Drive, Rm. 459
                      Los Angeles, CA 90045
Office Phone:         310-568-5712
E-mail address:
Fax:                  310-568-2303

Introduction & Course Description
This course is an in-depth review of the methods and principles of financing a
small business. While many of the basic financial management topics learned in
earlier courses are applicable to small businesses, there are many unique
considerations to the financing of an entrepreneurial enterprise.

To be successful in this class, you must keep up with the readings and lectures,
you must spend time working on and preparing the cases, and you must
participate in class discussions. You will be required to use the GraziadioNet.
Materials will be placed there for you and it will be an important communication
tool for the class. If you are not familiar with the portal, please look at it prior to

Course Description
This course addresses issues related to financing small business enterprises and
entrepreneurial ventures. Various sources of financing are examined: commercial
banks, venture capital, angels, and government financing. In addition,
collateralizing the firm’s assets for financing, such as inventory and receivables
financing, equipment financing, and real estate financing, is discussed. The Initial
Public Offer (IPO) process is examined as a means for emerging enterprises to
access public capital markets. A major focus of the course is developing pro
forma financial statements as part of an effective business plan which will foster
adequate and appropriate entity planning and valuation and enable the
entrepreneur to secure financing for the enterprise.

Finally, there are significant discussions concerning the ultimate plan and/or
goals for the business and the tradeoffs between family and work, as well as
ethical concerns in developing and managing the business.

Financial Calculations and Presentations
You should be familiar with Microsoft Excel™ and be able to accomplish present
value, future value, NPV, IRR and MIRR calculations. You should also be familiar
with PowerPoint™ for the presentations.

Course Objectives
This course will introduce a variety of concepts and analytical tools and provide
the student an opportunity to apply these tools to business cases and to current
entrepreneurial news. At the end of this course, you should be knowledgeable in
the practical steps and issues that will be faced throughout the small business
financing process. In addition, students will be expected to communicate these
skills both orally and in writing.

At the conclusion of the course, students should be able to demonstrate
managerial level decision making in the following areas:
   1. Measuring and evaluating financial performance of new venture
   2. Financial planning and forecasting
   3. Cost and sources of capital
   4. Creation and calibration of value
   5. Venture capital and other financing sources
   6. Harvesting the business venture investment
   7. Tradeoffs between family and business
   8. Ethical concerns for a entrepreneur

Texts and Course Materials
Entrepreneurial Finance 2nd Edition, by Leach & Melicher

      Participation                       30%
      Mini-Cases                          30%
      Group Presentations                 40%
      Total                              100%

There will be a series of Mini-cases used for analysis and discussion during this
course. Some of the cases will be for general discussion and all class members
should prepare for that discussion. Students are required to prepare a 1-2 page
write-up for each of the general discussion cases to be turned in the day of the
case discussion. These write-ups should cover the questions put forth in the case
and will comprise one-third of the Mini-case portion of your grade.

The majority of the cases will be assigned to specific teams of 4-people each,
who will be responsible for a detailed presentation of the case during class-time.
Each team will be assigned two of the cases to prepare and present. During the
presentations, the rest of the class should be prepared to ask relevant questions

to the presenters and ask key questions regarding the specifics of the case (i.e.
pretend you are a banker or a potential investor). The team should submit a
detailed copy of the presentation to the instructor at the beginning of the class.
PowerPoint and/or Excel may be used where appropriate. You should plan for
45-60 minutes for the presentation and discussion of the cases. These two cases
will represent the other two-thirds of your Mini-case grade.

Group Presentations
The class will be divided into two to four large teams for the group projects. Each
team will choose a new venture project to develop a pro-forma case and
presentation. The projects will be presented in the final class meeting, with each
team assigned 55 minutes for presentation and discussion. As with the Mini-
cases, PowerPoint and Excel should be used where appropriate for the
presentation and report. A complete copy of all presentation and supporting
materials should be presented to the instructor at the beginning of the class. As
a general guideline, there should be a 1 page executive summary, 5-10 pages of
detailed discussion of the project, copies of presentation slides and any other
supporting documentation. These should be submitted in e-form wherever
possible. Each of the team members must participate in the actual presentation
in order to get full credit for this portion of your grade. More details concerning
these projects will be discussed in the first class.

Attendance Policy
Class attendance is expected. If a class must be missed, the student is expected
to notify the professor prior to the class.

Class Notes and Lecture Notes
Copies of the class lecture notes and other materials will be available on the
Portal in the e-room under “materials” prior to each class. They are PowerPoint,
Excel or Word files.

Peer Evaluations
Peer evaluations of case presentations and participation will be used as part of
the grade determination. More details will be provided in class.

               “The University expects from all of its students and employees the highest standard of
      moral and ethical behavior in harmony with its Christian philosophy and purposes. Engaging in
      or promoting conduct or lifestyles inconsistent with traditional Christian values is not acceptable.
               The following regulations apply to any person, graduate or undergraduate, who is
      enrolled as a Pepperdine University student. These rules are not to be interpreted as all-inclusive
      as to situations in which discipline will be invoked. They are illustrative, and the University
      reserves the right to take disciplinary action in appropriate circumstances not set out in this
      catalog. It is understood that each student who enrolls at Pepperdine University will assume the
      responsibilities involved by adhering to the regulations of the University. Students are expected to
      respect order, morality, personal honor, and the rights and property of others at all times.
      Examples of improper conduct for which students are subject to discipline are as follows:

            Dishonesty in any form, including plagiarism, illegal copying of
            software, and knowingly furnishing false information to the University.
            Forgery, alteration, or misuse of University documents, records, or
            Failure to comply with written or verbal directives of duly authorized
            University officials who are acting in the performance of assigned
            Interference with the academic or administrative process of the
            University or any of the approved activities.
            Otherwise unprotected behavior that disrupts the classroom
            Theft or damage to property.
            Violation of civil or criminal codes of local, state, or federal
            Unauthorized use of or entry into University facilities.
            Violation of any stated policies or regulations governing student
            relationships to the University

      Disciplinary action may involve, but is not limited to, one or a combination of the
      alternatives listed below:

               Dismissal – separation of the student from the University on a permanent basis.
               Suspension – separation of the student from the University for a specified length
               of time.
               Probation – status of the student indicating that the relationship with the
               University is tenuous and that the student’s records will be reviewed
               periodically to determine suitability to remain enrolled. Specific limitations to
               and restrictions of the student’s privileges may accompany probation.” See
               current GSBM Catalog.

Policy on Disabilities
      Assistance for Students with Disabilities

               The Disability Services Office (DSO) offers a variety of services and accommodations to
      students with disabilities based on appropriate documentation, nature of disability, and academic
      need. In order to initiate services, students should meet with the Director of the DSO at the
      beginning of the semester to discuss reasonable accommodation. If a student does not request
      accommodation or provide documentation, the faculty member is under no obligation to provide
      accommodations. You may contact the Director of Disability Services, Lauren Breeding at (310)
      506-6500 or through email at:

Schedule of Classes:

Date             Topic                                  Chapter

Prior to Class   Read Chapters 1, 2 & 3 in
                 Entrepreneurial Finance (EF)

10/25/05         Introduction – Form/Assign Case Teams
                 Measuring Financial Performance       EF-4 & 5, BP-10
                 Evaluating Financial Performance
                 Tradeoffs between Family and the Business

11/01/05         Financial Planning                     EF-5 & 6
                 Short-term and Long-term

11/08/05         Types and Costs of Financial Capital   EF-7 & 9
                 Creation and Calibration of Value

11/15/05         Venture Capital Valuation Methods       EF-10 & 11
                 Security Structure and Enterprise Value

11/22/05         Professional Venture Capital           EF-12, 13, & 14
                 Other Financing Alternatives
                 Harvesting the Investment
                 What is Your Exit Strategy?

11/29/05         Financial Distress                     EF-15
                 Ethical Issues for Entrepreneurs

12/06/05         Coursel Project Presentations
                 Review and course Wrap-up


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