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2021 | OriginalPaper | Buchkapitel

7. Leveraging Startup’s Development with Debt

verfasst von : Roberto Moro-Visconti

Erschienen in: Startup Valuation

Verlag: Springer International Publishing

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Abstract

Seasoning startups can afford to collect debt whenever they start creating positive cash, build up worthy collateral assets, and soften information asymmetries. Leveraging growth with debt may increase it, albeit with a correspondent risk growth. Capital budgeting metrics, represented by Net Present Value or Internal Rates of Return, incorporate debt underwriting. This analysis is preparatory to Modigliani & Miller proposition II: as the proportion of debt in the company’s capital structure increases, its profitability, proxied by ROE increases in a linear fashion. An empirical case is provided, starting from a real balance sheet.

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Titel: Leveraging Startup’s Development with Debt
verfasst von: Roberto Moro-Visconti
Verlag: Springer International Publishing
Buch: Startup Valuation
Print ISBN: 978-3-030-71607-3

Electronic ISBN: 978-3-030-71608-0

Copyright-Jahr: 2021
DOI: https://doi.org/10.1007/978-3-030-71608-0_7