Trx Case

1740 Words Apr 16th, 2013 7 Pages
1. How does the strategic repositioning of the company and the use of the IPO as an exit for minority shareholders affect the attractiveness of the IPO? The strategic repositioning of the company was to gradually shift away and exist from customer care which TRX generated more than 50% in 2000, and Davis’s long term strategy was to focus on the higher margin sectors, such as data transaction and integrations. By shifting away from customer care, of course would reduce operational cost and increase bottom line for the company but I think it would affect the attractiveness of the IPO in negative way. If I was an investor I would be in agreement with TRX only if they were reducing the customer care due to the high operating cost, but …show more content…
For those two methods, a 15% discount was applied to this equity value based on the banker’s belief that a newly public firm would not trade at the same value as a seasoned firm. The proposed IPO filing ranged based on analysis should be set at least $11 to $13 per share. However, due to the investor demand during the time of TRX’s road show were really low, and the final IPO offer price will have to be $9 in order to attract more or enough investors. Technology changes so fast and brutal to make it more serious, Davis’s long term goal as discussed in question 4 might not be as good as it really is due the uncertainties of being in such shifting and fast moving tech world, it is very likely that TRX might or might not fail, we don’t know but if the company did not keep up with the skilled workforce and future prospects, it would put the company in a very difficult position even after IPO, if they are lucky, there could be some big investor jump in and take over the company but the chance are too low because TRX’s is still too young in terms of operation, and even know that the revenue have been steadily increasing, the net income were still negative and there were too many I considered red flags in the financial statement, for example, goodwill on TRX’s balance sheet have increased dramatically from 2003-2004, and current portion of long term debt almost 7 times as higher than previous year, all those factors be

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