NIVRAHA149_00435 |
Vorige | 435 van 1308 | Volgende |
|
klein (250x250 max)
gemiddeld (500x500 max)
groot
Extra Large
groot ( > 500x500)
Hoge Resolutie
Allen (PDF)
|
Deze pagina
Allen
|
Ch. 9] MARKETING OF INVESTMENT SECURITIES 411
country. When a particular proposition has been brought to
the banking house by promoters or wholesale bankers or has
been suggested by the field men or the research department of
the organization—"dug up" as the phrase is—the head of
the buying department will pass a rough judgment upon it.
If it is outside the scope of the organization, or unsuited to
the clientele of the bond house, or if it shows some glaring
defect not observed in the preliminary examination, he will
probably discard the proposition without further investigation.''
If the men in control of the buying detect no glaring
defect, they will first employ engineers to report on the physical
and economic value of the property ® owned by the company.
At the same time they will employ accountants to check
the figures of the company's own auditors. Meanwhile they
will have arranged some provisional basis on which the bonds
of the company may be acquired. This may be a definite price
or a provisional price subject to the auditors' report on the
one hand and the changes in the condition of the money
market on the other. If all these preliminary investigations
and negotiations are satisfactory, the bankers will employ their
d Chamberlain gives four steps in the elimination of issues by a bond
house: first, "to discard the propositions of companies that conduct a kind
of business unfamiliar to the bankers"; second, "to discard loans that have
not a claim on property worth, under the most unfavorable conditions,
more than tlie amount of the obligation secured" ; thirdly, "to discard those
propositions which do not give reasonable assurance of earning at all times
at least So per cent more than all fixed charges, after making extremely
liberal estimates for depreciation and future increased operating expenses";
fourthly, "to decline loans to companies conducted by men or with methods
that do not meet with approval." *
Unfortunately the lure of the "long profit," or the implied obligation
to enter syndicates because of "connections," makes most bond houses far
less fastidious than these sanctions would imply. As Mr. Chamberlain
would probably be forced to admit, there is a conspicuous difference between
what bond houses ought to do and what bond houses actually do.
e There is a growing reluctance on the part of the buying department
of banking houses to rely on what might be called a mere engineer report
covering the form, the quality, and the value of physical property. Reports
which value every nut and bolt from the engineering point of view are
often very deficient in a proper estimation of such property as parts of a
going business equipment, and structures which may have cost a hundred
thousand dollars may be worth a great deal more for the purpose of the
business or a great deal less.
3 Chamberlain, L., The Work of the Bond House, i6.
Beschrijving voorwerp
| Titel | The financial policy of corporations |
| Auteur | Dewing, Arthur Stone |
| Jaartal | 1926 |
| Collectienaam | NIVRA Historisch Archief, UBVU gedigitaliseerd |
| PPN | 344552586 |
| Toegangsgegevens (URL) | http://imagebase.ubvu.vu.nl/getobj.php?ppn=344552586 |
| Signatuur origineel | NIVRAHA149 |
| Evaluatie |
Beschrijving
| Titel | NIVRAHA149_00435 |
| Transcript | Ch. 9] MARKETING OF INVESTMENT SECURITIES 411 country. When a particular proposition has been brought to the banking house by promoters or wholesale bankers or has been suggested by the field men or the research department of the organization—"dug up" as the phrase is—the head of the buying department will pass a rough judgment upon it. If it is outside the scope of the organization, or unsuited to the clientele of the bond house, or if it shows some glaring defect not observed in the preliminary examination, he will probably discard the proposition without further investigation.'' If the men in control of the buying detect no glaring defect, they will first employ engineers to report on the physical and economic value of the property ® owned by the company. At the same time they will employ accountants to check the figures of the company's own auditors. Meanwhile they will have arranged some provisional basis on which the bonds of the company may be acquired. This may be a definite price or a provisional price subject to the auditors' report on the one hand and the changes in the condition of the money market on the other. If all these preliminary investigations and negotiations are satisfactory, the bankers will employ their d Chamberlain gives four steps in the elimination of issues by a bond house: first, "to discard the propositions of companies that conduct a kind of business unfamiliar to the bankers"; second, "to discard loans that have not a claim on property worth, under the most unfavorable conditions, more than tlie amount of the obligation secured" ; thirdly, "to discard those propositions which do not give reasonable assurance of earning at all times at least So per cent more than all fixed charges, after making extremely liberal estimates for depreciation and future increased operating expenses"; fourthly, "to decline loans to companies conducted by men or with methods that do not meet with approval." * Unfortunately the lure of the "long profit," or the implied obligation to enter syndicates because of "connections," makes most bond houses far less fastidious than these sanctions would imply. As Mr. Chamberlain would probably be forced to admit, there is a conspicuous difference between what bond houses ought to do and what bond houses actually do. e There is a growing reluctance on the part of the buying department of banking houses to rely on what might be called a mere engineer report covering the form, the quality, and the value of physical property. Reports which value every nut and bolt from the engineering point of view are often very deficient in a proper estimation of such property as parts of a going business equipment, and structures which may have cost a hundred thousand dollars may be worth a great deal more for the purpose of the business or a great deal less. 3 Chamberlain, L., The Work of the Bond House, i6. |
Tags
Toelichtingen
Geef een Toelichting voor NIVRAHA149_00435
