商务英语阅读(第二版) 王关富 Unit13 private equity 课后答案

Unit 13

The Business of Making Money

Exercises

1. Questions on the text:

1)What are the latest developments in private equity in recent years?

Compared to the 1980s, the targets of today’s private equity groups are much bigger in size. In recent years, the private equity industry has raised record money and its share of mergers and acquisitions has grown massively. The industry has also become a byword for money-making skills but its wealth has also brought many enemies.

2)According to the article, what are the main inconveniences for a company to

be a publicly quoted company?

The main inconveniences for a publicly quoted company include: its executives have to face intrusive media coverage; it has to obey strict and long corporate-governance codes; it also has to face the threats of activist investors and short sellers and the scrutiny by some politicians.

3)What are the main reasons for a company to get listed on a stockmarket?

Traditionally there are three main reasons to get a company’s share listed on a stockmarket. The first is to raise capital, either to expand the business or to allow the founders to realise their wealth. The second is to help retain staff, who can be offered share options as an incentive to stay and work hard. The third involves prestige; customers, suppliers and potential employees may be reassured (and attracted) by the apparent seal of approval given by a public listing. Meanwhile, being publicly listed gives a company better access to fund investors and retail investors.

4)Why are companies in the Anglo-Saxon economies reluctant to borrow from

banks?

Companies in the Anglo-Saxon economies were reluctant to borrow from banks because their often felt nervous about the possibility of the sudden withdrawal of credit from the banks, due to a change in lending policy, new management or an economic downturn.

5)According to the article, what are the main sources for today’s companies to

raise money (including equity capital and debt)?

Nowadays the main sources for companies to raise money are: first, equity market; second, banks, though much less important than they used to be; third, bond market; fourth, private equity.

6)How do private-equity firms respond to the problems identified by Professor

Jensen with regard to public companies?

Professor Jensen argued that the structure of a public company creates an inherent conflict between investors and the managers they hire to run the business, particularly with regard to the use of free cash flow. He also argued that