blog Bonorum et Malorum

What is a Corporate Finance Lifecycle?

Written by Fmi.Online

The corporate finance lifecycle is the evolution of a company through various stages. It is most commonly divided into four stages: launch, growth, maturity, and decline. Understanding the different stages of the corporate finance lifecycle is crucial for anyone working in the investment banking industry as it can significantly impact business decisions such as investments, M&As, strategic planning, and so on. 

Stage One: Start-Up/Launch

This is the beginning stage of any business that involves launching new products or services. The company’s focus is on acquiring new customers at this stage. This is typically done through targeted marketing efforts as well as communicating the company’s value proposition and competitive advantages to the stakeholders. Financially, in this stage the costs far eclipse the revenue as the company has significant initial fixed costs. As a result, the profits are non-existent or extremely low. This is also usually the phase when the company is figuring out its structure and teams, hence, most employees will need to diversify what they do. The primary focus at this stage should be maintaining an extremely tight budget and acquiring customers. 

Stage Two: Growth

In this stage, sales are accelerating with new and repeat customers, and companies may start clocking in profit once they make it past the break-even point. The cash flow usually becomes positive at this stage, allowing the company to plan for its future. This may include investing for future growth, building and retaining expert teams, and hiring top-level employees who can help scale the business. For future growth, companies at this stage, may turn to financing options for investment. This can include debt or fundraising by selling equity. The choice a business makes at this stage will depend on existing funds, its ability to pay back the debt or showcase positive results to investors. 

Stage Three: Maturity

This is the stage where the company has achieved stability, and operations are more or less in an autopilot mode. Employees are well-versed in their responsibilities, and the company structure is solidified. At this point, most companies may even be able to scoop out regular dividends. This is a result of having predictable and steady cash flows and growth whether through expansion in size, number of locations, or diversified products. However, while a company’s financial position may be the strongest at this stage, it is important to not get complacent and be thinking of dynamic growth. This could mean investing in new technologies, planning acquisitions, planting the business in other markets, among others. 

Stage Four: Decline/Re-Birth

If your revenue has plummeted for three or more continuous quarters, you have probably entered the declining phase of a business. This doesn’t necessarily imply the end of the business. Rather, it is an opportunity to think about ways to innovate whether through investing in technology, refreshing the company’s product line entirely, or investing heavily in marketing efforts to spin-off the business as a totally new one. As business owners, it is natural to get attached to the business and its model, however, the only surefire way to grow is to keep evolving as per the needs of the market. 

At this stage, some business owners may also decide to cash out their stake or think about re-investments. Cashing out of a business will require a strong troop of investment bankers, financial analysts, accountants and so on. If you decide to pivot, on the other hand, you might need a new set of a sales and marketing team to help you decide your business’s new focus. 

Conclusion: 

More Articles

What does an investment banking intern at top banks do on a daily basis?

An internship will involve working for long hours in a dynamic environment, with high standards for accuracy and work ethic. You must be aware of the practical workings of the industry to cope with your work

Read more
News

What are the latest investment banking internship hiring trends in 2023

To stay relevant and competitive, investment banks have adapted new hiring practices in the technology-dominated, post-COVID world. These hiring trends were visible across financial institutions. While in the previous calendar year institutes were worried about staffing and labour shortage, banks were predicting a long struggle for employees to continue to post the COVID-19 pandemic, according […]

Read more
Investment Banking

How to get the right investment banking certification

The lucrative growth prospects of investment banking make it a brutally competitive industry. Having done a relevant investment banking course improves your odds of breaking into the industry. However, investment banking courses come in different shapes, sizes and forms. The elementary investment banking courses provide students with an overview of the industry and its functions, […]

Read more
Investment Banking

What are the rarest skills the world’s top investment bankers are looking for?

Investment bankers are responsible for heavy corporate transactions like mergers, acquisitions, IPOs, fundraising, and investment advisory. A career in investment banking is demanding, highly competitive and challenging. The right skillset, however, can help you build a successful career in investment banking by making the job easier and more efficient. In this article, we will explore […]

Read more

How can you land an investment bank internship

Top investment banks offer investment banking internship programs, each year, hiring graduates to work for 3-4 months in their offices. Through these internships, interns get first-hand experience working in an investment bank, gain an opportunity to network with other bankers, and improve their resumes. More importantly, aspiring investment bankers can see if they have the […]

Read more
Interview Prep

What you might be lacking in your IB interview prep

Going through the fundamentals of finance, working on DCF calculations, and preparing financial models are some of the more obvious things that an aspiring investment banker prepares for before interviewing for a job at a top investment bank. But what about the subtle nuances that could determine whether you will land a job or not? […]

Read more
Investment Banking

You should be aiming for these 5 investment banks this year?

It is vital to start your career in investment banking with the right organisation, one that not only offers a healthy corporate culture but also supports your personal goals. Some of the critical aspects which you must consider while selecting an investment bank are corporate culture, compensation, core areas of focus, size of operation, history […]

Read more
Investment Banking

Which Investment Banking courses are a must-grab for aspiring investment bankers

Considering the lucrative prospects and growth possibilities involved, investment banking is a tough industry to crack. However, by following a few steps you can improve your odds. One such step is having done relevant finance and accounting courses. It will allow you to demonstrate better knowledge in the domain than your peers, which will set […]

Read more
Investment Banking

What is the most popular job title in investment banking this year?

Investment banking offers limited job titles and functions on a strict hierarchy, common globally. A typical hierarchy starts with investment banking analysts, followed by IB Associates, Vice President, Senior Vice President, all the way to Managing Director and CEO. Global investment banks, functioning in multiple countries, often have different job titles, however, the job descriptions […]

Read more
Investment Banking

How can an investment banking course help you land a job in 2023? 

With consolidation in global markets and alterations in the supply chain, businesses are exploring the path of M&A to exploit synergies with their global counterparts and achieve efficiency. This has led to an increase in corporate transactions, fuelling the demand for investment bankers. The size of the global investment banking industry is estimated to be […]

Read more
Our Courses are designed to boost your career

Launch your career with Fmi’s Learning Pathway

Choose a learning pathway that best meets your needs and ambitions. Not sure which Fmi learning pathway is right for you? Explore our CareerBuddy videos for help and advice.

Investment banking pathway

Investment banking pathway

Monthly Subscription
  • courses-clock60+ hours
  • courses-desktop9 courses

Investment banking offers many exciting career opportunities for students. From Financial Analysts to Investment Management, and Sales & Trading to a wide range of roles in infrastructure such as IT, Risk or Compliance. This pathway is designed to help you understand the investment banking industry, the roles investment banks are recruiting for, and most importantly, help you to develop the practical skills you need to get into the industry and your preferred role whether this be as part of a school leaver, intern or graduate program.

FMI Online Student join-student-img2 FMI Online Student
55,000+ students currently enrolled
Global markets pathway

Global markets pathway

Monthly Subscription
  • courses-clock70+ hours
  • courses-desktop10 courses

Global markets provide a range of important products and services to corporates, institutions and governments worldwide from executing trades and managing risk to providing quality research content. A key business area in all investment banks, global markets offers a wide range of career paths for students to consider across all functions and at all levels from school leavers to internships through to graduate programs.

FMI Online Student join-student-img2 FMI Online Student
85,000+ students currently enrolled
Asset management pathway

Asset management pathway

Monthly Subscription
  • courses-clock50+ hours
  • courses-desktop8 courses

The asset management industry is a global industry worth over 100 trillion US dollars. It plays a crucial role in managing the assets of retail and institutional investors, offering a wide range of exciting careers in doing so. If you’re looking to forge a career in asset management, our Asset management pathway is perfect for you. We help you build the skills all asset managers are looking for and explore everything you need to know about the industry and the wide range of roles available in the sector

FMI Online Student join-student-img2 FMI Online Student
100,000+ students currently enrolled