Clariton Antiques Ltd have just been approached by'We Finance Limited', a venture capital organisation, with an offer to finance their expansion by offering the full 0.5m for a 20% stake in the business. Alternatively they can use the services of a finance broker to obtain a bank loan. The broker will charge a 1% fee on the amount secured and interest on the loan would be 2% APR payable over 10 years.
1. Give an assessment of the information that will be needed to make decision on financing the takeover by;
a) The Partners
b) Venture capitalist [We Finance Limited)
c) Finance broker
2. Explain the impact on the financial statements if Clariton Antiques Ltd choose to go with;
a) Venture capitalist [We Finance Limited]
b) Finance broker