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IPO versus M&A for expansion

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A Virtual Organization, Riordan Manufacturing. Assume Riordan Manufacturing is privately held, wants to expand operations, and is faced with three options for expansion:

â?¢ Going public through an IPO
â?¢ Acquiring another organization in the same industry
â?¢ Merging with another organization

In 300 words paragraph in which you compare and contrast the options and make a recommendation about which strategy the organization must choose. Address the following:

What are the threats of each approach?

Format the paragraph consistent with APA guidelines, including in text citations, and reference(s).

The course work text is Titman, S., Keown, A.J., & Martin, J.D. (2011). Financial management: Principles and applications (11th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

PS: I attached the introduction paragraph of the paper.

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A Virtual Organization, Riordan Manufacturing. Assume Riordan Manufacturing is privately held, wants to expand operations, and is faced with three options for expansion:

â?¢ Going public through an IPO
â?¢ Acquiring another organization in the same industry
â?¢ Merging with another organization

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The main threat of going public is increased cost of compliance, increased need to disclose each important information to the public and constant pressure of being monitored by public investors, government and regulators. Public company is subject to numerous disclosure norms and have to maintain compliance to avoid penalties and fines. Further, if the IPO is a failure or does not yield suitable valuations or investors may not be willing to subscribe to the shares of the company, it will not only be a financial loss but huge loss of reputation as well. The ...

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Sandeep Bardia, MBA
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  • MBA, Rochester Institute of Technology
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