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A Discussion On IPOs, Acquisitions, Mergers

Case: This is a privately held company, a Fortune 1000 enterprise with revenues in excess of 1 billion dollars, and an industry leader in the field of plastic injection molding. Its headquarters is in San Jose, there are 2 plants in the USA, and 1 in China. The company wants to expand its operation. The company is faced with three options for expansion:

-Going public through an IPO
-Acquiring another organization in the same industry
-Merging with another organization

Consider the following as it relates to all three options should the organization pursue an international location:
-Factors that contribute to exchange rate risks

Solution Preview

This is a large, international company that wants to expand. In order to do so, they could issue an IPO, acquire another company, or merge with another company. All have risks and rewards. If they issue an IPO, they'll be able to attract investors worldwide, and their stocks will be regulated on the market. This will gain investor confidence due to the laws, rules, and regulations that must be followed from the SEC and other regulatory bodies set forth for publicly traded companies. The company could also successfully merge or acquire a company in the same industry, which would be a horizontal expansion or horizontal merger. This would create a large company, ...

Solution Summary

This solution discusses IPOs, acquisitions, mergers, and related topics. All aspects of the case question are addressed in detail.