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The practice of combining separate strengths to offset individual
weaknesses is not new. Team efforts work, and draw upon a larger pool of
talent to minimize individual vulnerabilities. When businesses team
together, perhaps one partner with plentiful cash flow, and another with
high potential and ability, debts may be consolidated into a common pool
and the potential of both partners maximized.
This debt consolidation
partnership has became the most common form of financing for initial
public offerings of stock (IPOs). Inevitably, a few high risk
enterprises funded by venture capitalists file bankruptcy. At the point
of filing bankruptcy, partner liability is determined by the legal
entity chosen to protect individuals.
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