This document discusses options for financing a business through debt or equity. It outlines key considerations for each such as the costs and terms of debt financing versus giving up ownership through equity financing. Real-life examples are provided of businesses using debt to fund acquisitions and growth or using equity financing from venture capital, private equity or going public. The document advises business owners to evaluate their execution plan, exit strategy, and protect against downside risks like dilution depending on whether they pursue debt or equity financing.

1. Financing your
business via debt or
equity August 2019
By Ren Hor Wong

2. Debt and Equity financing advisory
Ren Hor Wong
Executive Chairman and CEO
N1 Holdings Ltd. (ASX:N1H)
renwong@n1holdings.com.au

3. Introduction – Ren Hor
Wong (CEO of N1H)
• Settled $2b business, commercial and home loans
• Accumulated over $800m in loanbook size
• Over $10m SME credit fund
• Raised over $30m in capital via debt and equity
• Top 10 Independent Brokerage 2015 & 2017
• Top 25 Brokerage 2016, 2017 and 2019
• Ranked #46 2017 AFR Fast 100
• Company inception July 2011, ASX-listed in March
2016

4. Financing your
business
• Fuel for organic growth
• Working Capital
• Acquisitions and expansions
• New hires/recruits

5. Debt
Financing
- loans
- business plan
- cashflow projection
- effective cost of debt

6. Equity Financing
- sell shares/ownership
- valuation of business
- shareholders agreement
- board of directors
- Corporate governance and management

7. Debt or
Equity?
- too early to sell?
- over-leverage?

8. The
mechanics of
debt
financing
- cost
- term
- amount
- other conditions ie. Convertible?

9. The
mechanics of
equity
financing
- value
- voting power
- subsequent rounds of capital raising
- strategic value

10. Purpose, execution
plan and exit strategy
- purpose of debt and equity: return on investment
- execution plan: management experience
- exit strategy: market size and company vision

11. Upside and downside
- debt upside: ownership retained
- debt downside: repayment risks
- equity upside: strategic value and permanent capital
- equity downside: loss of portion of ownership

12. Protect your
risks
- Dilution
- Costs of Fund and others

13. What you
need to ask
investors?
- Strategic Value
- Expectations

14. Real life
examples of
debt financing
- Acquisitions via debt
- Organic growth via debt

15. Real life
examples of
equity financing
- VC/PE/IPO
- shares swap/issue new shares