Cash flow is one of the most critical aspects for the success of any business. For many companies, cash flow is not easily achievable, and several criteria are adopted to achieve it. The sourcing of funding from venture capitals is one such avenue and comes with both merits and demerits. Technically, when a venture capitalist invests in a company, they change the financial landscape of the business, and so do they change its ownership; they expect a percentage of the shareholding of the company, in this case, 75%. I recognize that the company stands to benefit in the following ways: avoiding the burden of loan repayment, and high interest rates on loans take. This is because the company will avoid winding into credit and exorbitant high interest rates in the market. This could also see to the pumping of new management prowess and injection of experience. This is because when a venture capitalist invests in a company they bring in technical and managerial advice using experience that they have attained over time.
On the other hand, accepting funding from the company implies ceding some control. It is on the basis of the venture capitals nature and track record that I will make a decision. I like to work with other people in order realize progress in management. Therefore, if the venture capitalist has a similar track record, I would be willing to go to bed with them. Otherwise, it would be very difficult, and because there is a likelihood that the relationship would be rough, with difficulties and bureaucracies in decision making. This is especially the case because the venture capitalist is swinging in with their appointed CEO; this could largely influence the work ethic and day-to-day business execution.
In the case of Comet Skateboards, the manager hired brought on board the much needed technical expertise in financial management. As reflected in the soon to be obtained results, the introduced the much needed financial guidance; this is with respect to financial planning, and the critical decision making regarding the optimal use of the available resources. This, the manager achieved despite the fact that Comet Skateboards is a B-corporation with a triple bottom line orientation. The idea of a takeover at Comet Skateboards has several pros. Foremost, the sales are likely to spike given the hype and mind-set borne that the company has been acquired by a big company; this depends on the company acquiring it. Access to new and wider market is the other advantage that may arise thereof. Potential cons of an acquisition at Comet Skateboards include the loss of customers that believed that it vouched for what they love; this is especially the case because Comet Skateboards is a member of the B Corporation. As is also evident, Jason Salfi and his fellow founders stand to have a hard time working with the new ownership. This is covered under the disadvantage of difficulties with employee transitions.
Haislip, A. (2011). Essentials of venture capital. Hoboken, N.J: John Wiley & Sons.
Kurtz, D. L., & Boone, L. E. (2011). Contemporary business. Hoboken, N.J: Wiley.