Fin501 Case 1

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Trident University International Module 1 Case Assignment FIN501: Strategic Corporate Finance Dr. John Halstead August 9, 2013 AVG Technology: Traditional IPO VS. Auction Based IPO Our nation has suffered through a recession for the past decade. Small and large businesses, alike, have suffered directly resulting in American jobs being lost, the national debt skyrocketing into the trillions, and parents struggling to keep food on the table for their children. Foresight is a trait that a business owners, or executives, must possess to lead their company in profitable times, and navigate through turbulent times. One of the most significant events in the life of any company is becoming publically traded; when a company “goes…show more content…
The fees of getting either kind of IPO is significant. Typically, legal fees and expenses are the largest single cost item, running from $600,000 to $900,000. Accounting fees and expenses are usually not far behind, generally ranging from $350,000 to $600,000, while printing and engraving expenses often are from $175,000 to $400,000. The total expense of going public generally ranges from $1.5 to $2.5 million, including such significant cost items as stock exchange application and filing fees, Blue Sky fees and transfer agent and registrar expenses (Maxivest, 2005). The following chart reported by Ritter (1998), extracted from nyu.edu, depicts the average insurance an underwriting cost of the IPO process: (Ibbotson, Sindelar, & Ritter) As previously stated, there is a significant cost to going public; organizational leadership must weigh the benefit of the potential capital with the cost of the process. AVG Technology used a traditional IPO to go public because it is stable and they ensured they raise their desired capital. Opposite to Google Inc’s success, IPO auctions are unpredictable and are not worth the risk unless the company has a well known lucrative product or is a high profile company; such as Google Inc. “Google’s high-profile IPO did not alter the trend: only three of more
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