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Summary All You Need To Know About The City FULL NOTES $19.89
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  3. London School Of Economics (LSE)
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Summary All You Need To Know About The City FULL NOTES

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  • Commercial Awareness
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  • London School Of Economics (LSE)
  • Book
  • All You Need To Know About The City

Complete set of notes on Christopher Stoakes' All You Need To Know About The City, with additional notes on the steps of an M&A transaction. Invaluable information for any interviews/assessment centres/ general goal of improving one's commercial awareness. Notes helped me secure a Vacation Scheme +...

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  • Yes
  • January 11, 2020
  • 25
  • 2019/2020
  • Summary

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  • commercial awareness
  • chris stoakes
  • stoakes
  • christopher stoakes
  • all you need to know about the city

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  • LLB
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Christopher Stoakes, ‘All You Need To Know About The City’
Chapter 1: City as a Market:
- Types of money:
o Loan: the advance of money. Paying for money using money [interest]
 The cost of a loan is the interest you pay on it
 Principal: the initial amount of £ borrowed.
o Equity [only available to companies]
 Shares companies’ issue.
 Investors become shareholders
 Look for 2 things:
 Increase in the value of company [their share being traded for a lot]
 Dividends
- Staying in business is all about cash flow [more important than profit]
o Businesses are encouraged to borrow as they can deduct the cost of borrowing from their profits
 Reducing tax
o Economies of scale expand to decrease costs of production
- Buying and selling of shares occurs on a stock market
- Insurance as the mutualisation of risk [why building societies are called building societies]
o When you deposit or borrow money, you are a member of it and therefore an owner

Chapter 2: Equity: The Lifecycle of a Company:
- Types of funding:
o Fixed capital: fixed assets
o Working capital
 Without working capital, businesses have a cash flow crisis.
- Where do you get the finance?
o Not loans
o Equity finance – provided by investors
 Amateur investors: Friends, Family, Fools.
 Professional equity investors: venture capitalists [VCs]
 They often seek to own more than half of a business [not to control it, but to ensure that their
return is adequate]
 VCs make their money from spotting start-ups that are likely to be successful. They then need
to sell their investment to get profit to invest in other start-ups exit routes.
- Exit Routes:
1. Recycling selling their stake to another VC provider [NB: there are different types of VCs]
o Seed-corn/start-up funders [those that invest in the beginning]
o Late-stage equity funding
2. MBO [Management buyout]
o Circumstances:
 Founders buying back from VC
 Subsidiary buying from parent
3. Trade sale VC encouraging businesses to sell to a bigger one to increase profit
4. Listing [Initial Public Offering [IPO]]
o Listing on stock exchange
 Some don’t want to due to restrictions [e.g., informing shareholders plus the pressure from
shareholders on how to run the business]
- What is the London Stock Exchange [LSE]?
o A Company!
 Charges companies to list
 Charges investors for buying and selling
 Sells information generated from buying and selling data
- Running the LSE:
o Significant concern= getting people to want to list.
 Not listing any old companies [especially those that are going to go bust]
 There needs to be an element of trust
 However, the LSE cannot promise that all companies will do well [they can’t know this]
 Just need to ensure that investors have the best information required and remain up to date
with the companies’ actions
o Requiring listed companies to communicate
o Some companies viewing listing as a right of passage- evidence of a company growing up
o Level playing field for investors:
 Insider trading:
 Investors buying shares on information that isn’t readily available [illegal]
 Don’t want a group of investors to manipulate the market

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