of 3.6 million shares (the company had 12 million shares prior to the IPO). The new shares were priced at $15 each. The company did n
Business Decision Problem Egghead, Inc., was a software chain that had over 100 stores across the U.S. Initially its founders and employees owned the company privately. The company eventu ally went public with an initial public offering (IPO) of 3.6 million shares (the company had 12 million shares prior to the IPO). The new shares were priced at $15 each. The company did not hold any treasury shares.
Required
a. Assume that the common shares had a $1 par value. Provide the
b. Discuss whether you think Egghead's board of directors and existing shareholders had to approve the public issuance before it occurred.
Provide some reasons why Egghead wished to raise $54 million with equity rather than debt.
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