This study discusses that equity financing is considered to be less risky because the commitments related to cash flow is respected, but this results in the dilution of the earning, control and share ownership. Moreover, as it is already known the cost of equity is higher than the cost of debt. This implies that equity financing can double the hurdle rate. This study is also based on such concepts of funding and investment. Arthur Graham plc (AG) is a listed company which owns building merchant chains. It is located in the south of England. The company is mainly financed through equity, keeping in mind the organic growth of the firm. AG wants to acquire an unlisted company called Sandboy Ltd, which also owns building merchant chains. However, the problem is regarding the funding that AG has to make in order to acquire the company. The shareholders of Sandboy Ltd have demanded 25 percent of the market capitalization of AG, for acquiring their company, which was accepted by AG, as they found Sandboy Ltd. to be a good prospect for them. However, AG could not raise funds from its internal sources, so it has to find out ways to fund the acquisition. Moreover, all the three directors of the company have different opinion regarding the funding or investment process . In case of corporate financing there are certain principles that organisations have to follow before making investments. In this case AG plc will also have to follow such procedure. The structure of the firm is analysed, which means the management at AG plc will have to assess its organisational structure first. This includes assets in place and growth assets. The assets in place are those assets that are already with the firm and growth asset are those which the firm expects to acquire or invest in future. In order to finance such growth asset, the firm may raise money from investors or the financial institutions. The investors can be promised an interest that the firm will generate through cash flow. This study highlights that in case of public companies, the means of debt financing is bonds, and equity is common stock. However, in case of privately owned companies, the equity is the savings of the owners, and debt is the loan taken from bank or financial institutions. AG plc is a public company, and as discussed, it may issue bonds, debenture or preference shares to raise funds, issue right shares, etc., to raise equity financing or a mixture of both, for acquiring Sandboy Ltd. In such case the opinion of the directors has to be considered.