Note on Financial Contracting: "Deals"
Describes the issues involved in designing and evaluating financial contracts between users and suppliers of capital and between companies and employees. A simple conceptual framework is introduced and some critical issues addressed: 1) How is cash allocated? 2) How is risk allocated? and 3) What are the incentives for all parties in the deal? The emphasis in the note is on providing the reader with a set of questions that must be addressed when designing and evaluating any deals. Created for use in Entrepreneurial Finance. Can be used to provide general background reading or as an assignment for a day devoted to the discussion of deals.