written 6

docx

School

Ekiti State University, Ado Ekiti *

*We aren’t endorsed by this school

Course

Subject

Business

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by cruizman4real

Introduction In order to grow, Dottie's Foods, a small full-service grocery company with multiple inner-city locations, is looking for an additional $23 million in funding. Affiliate groups weigh the options of non-public shares or public debt (corporate bonds). In this instance, the analyst can assess the circumstances and advise the organisation on investment selection. The objective is to generate equity for the company in order to find ways to increase and sustain enterprise costs. Financial institutions, commercial debt, equity securities, non-public securities, and reduced leverage are some of the ways that capital can be supplied (Don Mayer, 2012). Since these are the two options available to employers, we will pay particular attention to whether the company finances itself through the sale of shares or bonds. Initial Public Offering (IPO) One way to explain the distribution of a private entity's initial shares for public revenue is through an initial public offering (IPO). One method for raising money for a commercial company's operation and/or expansion is an initial public offering (IPO), which is carried out with the intention of making shares or stocks available to the general public. Before growing into more sizable publicly traded companies, the majority of agencies are initially non-profit organisations supported by other non-profit organisations, friends, or family. The agency's shares are offered for sale to the general public on the capital market, converting it from non-public to public ownership. Underwriters, or investment bankers, use this technique to calculate the payout for shares in initial public offerings. The company must comply with all SEC regulations in order to be eligible to issue an IPO (Adam H., 2020). The IPO process

CFI (2020) states that IPOs last roughly six months and are divided into the following verticals: I. Select a bank: The issuing company needs to pick a bank that is trustworthy, has top- notch training, and has business acumen. II. Due diligence and documentation: To assist the issuer in selling its shares, the financing bank or underwriter serves as a middleman (or broker) between the issuing business and the investment community. Cover letters, intent letters, written contracts, prospectuses, registration statements, personal documents, and red tape are among the documents that copywriters have to prepare. III. Pricing: Following the SEC's approval of the IPO, the issuing company and the underwriter determine the price at which the shares will be sold and set the effective date. This expense, which is impacted by a number of variables including market and economic conditions as well as corporate goals, dictates how the issuing company raises capital. IV. Stabilisation: In this phase, an offer is made by the underwriter, who also sets up a market for the inventory that will be released once the market has stabilised. A vacation is a brief visit. V. Transition: 25 days following the initial public offering, this stage begins. comprising purchasers who force statistics on their inventory. A highly successful initial public offering (IPO) occurs when a company's market capitalization, within 30 days of the offering, matches or surpasses that of its competitors. In any event, it won't be influenced by the IPO's overall success (CFI, 2020).

Discuss the impact and implications of each alternative It can be highly helpful for prospective investors in the company to remember the bond yield because the owners of the corporation owe money to the bondholders and the company must pay the coupon rate and the payment when the bond matures. Because taxes are paid on the borrower's interest and additional borrower cash can be paid while shareholders may lose their investment, debt is typically less expensive. The facility (debt) has the advantage of being an extremely inexpensive source of funding. Don Mayer (2012) states that bonds are convertible as long as clauses allowing bondholders to convert bonds into shares can be included. Bonds, therefore, render debt unmanageable but yield less than the financing. The primary drawback of bonds, however, is that the company might have to make up any losses on its books to the bondholders if it fails to pay them. Because shares have a larger number of shares and a wider buyer base, corporations are advised to choose shares. Framework for Regulation of the Criminal and Business Environment (2012) "Among the many benefits of selling inventory to businesses is the avoidance of debt, which makes it a potentially better option than moving inventory. When compared to bonds, selling stocks draws traders who prefer greater risk and increases the company's exposure. The business must also consider its other resources, which include private equity, angel and venture capital, and venture capital. The term "private equity" describes the financing provided to an employer for their benefit through non-public traders, properties, or corporations. Higher financing costs and/or the return of a significant stake in the company are the drawbacks of this kind of investment (Don Mayer, 2012).

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

As a new IPO, how will financial protection change? In accordance with Hayes (2020), a public employer is required to disclose financial, accounting, tax, and other business information. In addition, it may divulge trade secrets as well as techniques and tactics that will help it contend for sustainability. to make clear This is a crucial prerequisite for the IPO process because the business will not keep its internal report. What is the financial impact of this decision? Due to the frequent audits that business companies undergo, this option may result in more transparency. Furthermore, when compared to private or affiliated businesses, these institutions can offer income with the appropriate credit score, which in turn offers more favourable credit score loan terms. Hayes (2020) How will the additional debt affect future income? Failure to meet loan service requirements by businesses can lead to substantial losses on public loans. (2012) In terms of cash management, the use of bond yields in extreme entertainments raises questions about the loan's outcome and is inappropriate for this organization's commercial enterprise's fundraising goal. How will the new shareholders change the management of the company? Because they have to get shareholder approval before they can choose the company's directors, board of directors, and management and make decisions that will impact the organization's future, new shareholders will actually trade agency governance. via an acquisition, sale of an agency, modification of the company's bylaws, issuance of more authorised shares, or other major transaction. Fedorov (2017).

Conclusion and Recommendation Lastly, the initial public offering (IPO) is likely to be successful if, within 30 days of the offering, Dottie's Foods' market capitalization is equal to or higher than that of its rivals (CFI, 2020). If there are no extra expenses, I believe that providing inventory for Dottie's groceries is a better choice. Additionally, the business may select a different bond if family members are still required to hold managerial authority.

Reference Adam H. (2020). Initial Public Offering (IPO). Investopedia. Retrieved from https://www.investopedia.com/terms/i/ipo.asp Baker, H., & Powell, G. (1992). Why Companies Issue Stock Splits. Financial Management, 21(2), 11-11. Retrieved from http://www.jstor.org/stable/3665659 Butler, A., Grullon, G., & Weston, J. (2005). Stock Market Liquidity and the Cost of Issuing Equity. The Journal of Financial and Quantitative Analysis, 40(2), 331-348. IPO Process - A Guide to the Steps in Initial Public Offerings (IPOs). https://corporatefinanceinstitute.com/resources/knowledge/finance/ipo-process/ Don Mayer (2012). The Legal Environment and Foundations for Business Law. The Legal Environment and Foundations of Business Law (pp. 942-977). Licensed under a Creative Commons by-nc-sa 3.0 https://2012books.lardbucket.org/pdfs/the-legalenvironment-and- foundations-of-business-law.pdf Fedorov, S. (2017, November 21). What Influence Do Stockholders Have in a Business? https://smallbusiness.chron.com/influence-stockholdersbusiness-20747.html Hayes, A. (2020, April 28). Learn About Initial Public Offerings (IPOs). https://www.investopedia.com/terms/i/ipo.asp James Chen. (June, 2019). Public Offering. Retrieved from; https://www.investopedia.com/terms/p/publicoffering.asp Managing Financial Resources. (2012). An Introduction to Business (Vol. 2, pp. 685-745). Licensed under Creative Commons by-nc-sa 3.0. The Legal Environment and Foundations for Business Law (2012). The Legal Environment and Foundations of Business Law (pp. 942-977). Licensed under a Creative Commons by-nc-sa 3.0 https://2012books.lardbucket.org/pdfs/the-legal-environment-andfoundations-of-business- law.pdf What is the IPO Process? (n,d) Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/finance/ipo-process/

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

CW2P2 (1).docx

A11_AUTOMATIZADA.docx

Management and Managing comp 3 (8).docx

BSBTEC403 - A2 V02_301023.docx

WK2 DQ.docx

BSBTWK503 Task 1.pdf

Community Event for Poverty Alleviation.docx

SU_MBA5005_WK4_Berry_Henry.docx

Managerial Economics (New).docx

BSBCRT412 chayanit mercury task2.4.pdf

Company Analysis - Copy.docx

SITXWHS006-Workplace-Assessment-Task-3-Observation-Form-v1.0.docx

Recommended textbooks for you

Practical Management Science

Operations Management

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:Cengage,

MARKETING 2018

Marketing

ISBN:9780357033753

Author:Pride

Publisher:CENGAGE L

Foundations of Business (MindTap Course List)

Marketing

ISBN:9781337386920

Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Publisher:Cengage Learning

Principles of Management

Management

ISBN:9780998625768

Author:OpenStax

Publisher:OpenStax College

Marketing

ISBN:9780357033791

Author:Pride, William M

Publisher:South Western Educational Publishing

Foundations of Business - Standalone book (MindTa...

Marketing

ISBN:9781285193946

Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
MARKETING 2018
Marketing
ISBN:9780357033753
Author:Pride
Publisher:CENGAGE L
Foundations of Business (MindTap Course List)
Marketing
ISBN:9781337386920
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:Cengage Learning
Principles of Management
Management
ISBN:9780998625768
Author:OpenStax
Publisher:OpenStax College
Marketing
Marketing
ISBN:9780357033791
Author:Pride, William M
Publisher:South Western Educational Publishing
Foundations of Business - Standalone book (MindTa...
Marketing
ISBN:9781285193946
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:Cengage Learning