Using an example of new venture financial management where the capital-raising process has been initiated or completed assume the role of an investor and analyze the initial public offering process and the financial outcomes and offer any recommendations. Please mention the stages of raising capital and any pricing strategies that went into the IPO. Please provide the company/URL you used so that I can research the information further to assist in my overall understanding.
I'm not looking for a long review; perhaps just 400-500 words as I thought this example would help me better understand capital valuation.
The new venture financial management is for making robotic arms for handling corrosive chemicals. Your capital-raising process has been started.
The process of selling shares that was formerly privately held to new investors for the first time. Otherwise known as an initial public offering (IPO).
Yours is a privately held company for making robotic arms for handling corrosive chemicals. A privately held company has fewer shareholders and its owners don't have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents, and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too. Did you know that IKEA, Domino's Pizza, and Hallmark Cards are all privately held?
Even though you are a private company, you want to go public. It usually isn't possible to buy shares in a private company. Similarly it is not possible to sell shares of your company for making robotic arms for handling corrosive chemicals. You can approach the owners about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. This is why doing an IPO is also referred to as "going public."
Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter. In the United States, public companies report to the SEC. In other countries, public companies are overseen by governing bodies similar to the SEC.
Why should your company for making robotic arms for handling corrosive chemicals Go Public?
Going public raises cash, and usually a lot of it. Being publicly traded also opens many financial doors:
· Because of the increased scrutiny, public companies can usually get better rates when they issue debt.
· As long as there is market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal.
· Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent.
Being on a major stock exchange carries a considerable amount of prestige. In the past, only private companies with strong fundamentals could qualify for an IPO and it wasn't easy to get listed.
The Internet boom changed all this. Firms no longer needed strong financials and a solid history to go public. Instead, IPOs were done by smaller startups seeking to expand their business. There's nothing wrong with wanting to expand, but most of these firms had never made a profit and didn't plan on being profitable any time soon.
STAGES FOR RISING CAPITAL:
1. Gather as much information ...
Here is just a sample of what you'll find in this solution:
"Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report..."