University of the people
BUS 5111: Financial Management – Term 1, 2017-2018
Written Assignment 6
XXX XXX XXX Abstract
In this case, Constantine’s Grocery became a full service grocery store chain in the USA and required additional 135 million dollars to maintain current operations. This paper is intended to provide the narrative to discuss pros and cons of different ways such as issuing debts and stocks to raise capital. Later, I talked about initial public offering(IPO) process.
Background Information
Constantine’s Grocery, one of family businesses in the USA, has endured sixty years and became a full service grocery store chain. In order to maintain the current operations and support the growth in the future, an additional
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issuing stocks to the public. has some benefits. Firstly, it increases public profile, and provides reassurance to customers and suppliers (Advantages and disadvantages of stock market flotation, n.d.) Secondly, it creates a market valuation for the business since financial statements and annual report of the company are disclosed.
However, it has several downsides including increased disclosure, potential loss of control and potential restrictions on management action. The company is required to disclosure the information of the company such as salaries of the managers on a timely and regular basis to fulfil the requirements from stock exchanges, securities commissions and regulators and board of directors would limit managers' action and act in the shareholders’ best interests. (James, 2008) The competitors and investors may get more internal information of the company after disclosure.
Initial Public Offering(IPO)
IPO is a process of a private company becoming to a publicly-traded company with the first sale of the shares of the stock in the stock market. (Matt, 2015)
Initial Public Offerings process involving many different people, including investment bankers, attorneys, and accountants to make the process go smooth within 6 months. (Private-owned company IPOs: Is timing everything? | Deloitte US,
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(n.d.). Retrieved October 03, 2017, from https://moneyterms.co.uk/debt_covenants/
Suralta, J. (2016, April 12). Is Your Company Aiming for an Initial Public Offering? This Checklist Can Guide You. Retrieved October 03, 2017, from http://foundersguide.com/guide-to-ipo-process/
IPO Process - A Guide to Initial Public Offerings (IPOs). (n.d.). Retrieved October 03, 2017, from https://corporatefinanceinstitute.com/resources/knowledge/finance/ipo-process
Koba, M. (2013, December 27). Initial Public Offering: CNBC Explains. Retrieved October 03, 2017, from https://www.cnbc.com/id/47099278
Execute a debt offering. (n.d.). Retrieved October 15, 2017, from https://www.pwc.com/gx/en/services/audit-assurance/ipo-centre/execute-a-debt-offering.html
Advantages and disadvantages of stock market flotation. (n.d.). Retrieved October 15, 2017, from https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-stock-market-flotation
Marino, M. (2015, August 31). Stock Market Basics: What Is An IPO? Retrieved October 15, 2017, from http://www.nasdaq.com/article/stock-market-basics-what-is-an-ipo-cm514916
Brain, M. (n.d.). How NASDAQ IPOs Work. Retrieved October 15, 2017, from
Under the circumstance of an IPO, tranches C, D and E will convert to common at their negotiated prices while A & B will be redeemed.
Downsides to being a public limited company is that there will be greater access to the company’s financial performance and actions which loses abut of the businesses privacy. The value of the company will be determined by financial markets through the trading of the company’s shares.
Address the following questions in a 4-5 page write-up of the Boston Beer Company Case to explore the issue of Initial Public Offerings.
Assume that you are a CEO of a medium-sized company that needs a significant influx of cash for several expansion projects. As the CEO, you must determine whether your company should remain private or go public. Some companies postpone going public due to the unpredictability of economic and market conditions. Consider the ramifications of both alternatives. Construct an argument for and against going public. Before providing your response, review the guidelines and regulations associated with going public by visiting Small Business and the SEC located at http://www.sec.gov/info/smallbus/qasbsec.htm.
Major companies and corporations that comprise a big part of the United States economy take advantage of certain opportunities such as going public through IPO’s, acquisitions, and mergers. These three approaches provide an additional resource and many times an advantage to expand, become more profitable, or simply save a company’s existence.
Address the following questions in a 4-5 page write-up of the Boston Beer Company Case to explore the issue of Initial Public Offerings.
3. At what price would you recommend that Rosetta Stone shares be sold?Rosetta Stone: Pricing the 2009 IPO
The first step was to develop a mission state for our business. This was critical because we needed to define exactly what business we were to be in. Next, we would find sources of information concerning the local economy and market. It was determined that we could use the internet and local business leaders to assist us in gaining the necessary information.
For years, consumers had been increasing the number of meals that they consumed outside of the home (Connor, n.d.). This limits the amount of groceries that they purchase, which in turn affects the profits of the grocery industry. Peterson (2014), also reports that the single largest threat to grocery stores in the early part of this century was the advent of supercenters and warehouse clubs. Connor (n.d.) showed that nearly half of the residents of Hanover reported that they did most of their shopping in a chain store. These types of stores offered everything under one roof and added to the convenience of shopping. Another social factor that potentially affected the stores success was the fact that Jefferson county was a rural area with land that was predominantly used for agricultural purposes (Connor, n.d.). In rural areas, consumers were more likely to grow their own fresh produce so this type of offering in their stores wouldn’t have had a significant impact on the number of shoppers that they could attract. Peterson (2014) reports that only 35% of consumers say that the availability of fresh produce determines where they will grocery
There are considerable advantages with obtaining equity through the IPO process. There are, however, some drawbacks that also need to be taken into consideration. Some of the advantages and disadvantages are:
While Publix has many strengthens there is always room for improvements in regards to suppliers, customers, competitors and employees. The supermarket has gained market sharing presenting competitive pricing to alike products and categories with other competitors. In order to improve products they can offer exclusive items to their customers sold only at their stores which allows Publix to have a competitive advantage over its competition. Publix can also reinforce their relationship with their employees by adding incentives within the organization as well as adding non-monetary bonuses that will continue to motivate the employees which will build loyalty and employee retention.
Employees should also be presented with the financial statements of the company so that they can realize the fruits of their efforts. With knowledge come great rewards. The impact of knowing the financial status of the company provides incentives for employee performance; work hard and get a bonus. Also, the offering of financial statement will show the employees are not separate from the work that has help to mold and maintain operations but instead include them in what is going on to offer suggestions for improvement. This makes the workers to feel appreciated and increase their efforts in helping the
Therefore, these concerns can only be handled after the company decides on the offering structure, which defines investor’s demographic and a precise stock exchange to list on. Afterward, the company and its underwriters must begin to prepare the required documentation for both potential investors and regulators. The main documents are registration statements and a prospectus which contains all the financial and non-financial information that potential investors require in order to make the investment decision. In most countries, the contents of the prospectus must be approved by the local securities regulators before it can be distributed to potential buyers. (Bodie et al. 2005,
(Q1) Janet Richards and Gilbert Baker own a small firm named InterCat. The firm specializes in the creation and maintenance of Internet catalogues aimed at small businesses. It currently employs around 50 people, most of whom are computer programmers and analysts that follow the high technology market closely. As partners of the firm, they have decided to continue growing and to capture new business from its competitors. To do so, they have decided to start the process of making an initial public offering (IPO). The goal is to start this process as quickly as possible for several reasons, including becoming first to market to capture most of the market share, obtaining a good stock price, and to be one of the few private firms in the