Running Head: BERRY’S BUG BLASTERS
Berry’s Bug Blasters
January 18, 2010
Berry’s Bug Blasters
Berry’s Bug Blasters is a privately held pest control company that has been in business since at least 2005. They offer customers one time treatment and monthly service plans, as well as chemicals to allow customers to complete some treatment on their own to eradicate a variety of pests, including: roaches, termites, ants, scorpions, rodents, armadillos, snakes, bed bugs, silverfish and bees. In 2005, the company had a negative net income of ($380.65), but has successfully expanded since then, earning $293,475.56 in net income in 2006, then $769,000.80 in 2007, and $493,139.75 in 2008. The company now seeks to further expand…show more content…
By acquiring with another organization in the same industry will help Berry’s Bug Blaster to expand faster. All the costumers, equipments, building will be owned by Berry’s Bug Blaster. The expanding and population time will be shorter and will give them twice as much of advertising. If Berry’s Bug Blaster decide to merge with another organization will have the same effect as acquiring the business but with merging will have the knowledgeable staff that will helped them to know how to expand and be more popular for the public. Also if the other company has more locations around the country, Berry’s Bug Blaster will automatically expand their services.
Weakness of Each Approach
Each of the approaches for expansion – IPO, Acquisition, or Merger – also has weaknesses. An IPO can be expensive and may require 15-25% of the money raised to cover the costs of raising capital in this way. An IPO also requires a tremendous amount of reporting to meet the requirements of the SEC, both for the initial offering and for the future publicly traded company, which not only requires the time and effort of staff members but may also give valuable information to the company’s competitors. All this reporting then creates legal liability for errors and omissions in the prospectus, which adds a further layer of complication. In the end, the former owners lose some control over the business and must share future wealth with the new shareholders. Mergers