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Opportunities of IPO, Acquisition, and Merger for Huffman Trucking

Assume your organization is privately held, wants to expand operations, and is faced with three options for expansion:

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

Compare and contrast options and make a recommendation about which strategy the organization must choose.

Address the following:

Opportunities of each approach

Huffman Trucking History

A native of Cleveland, Ohio, K. Huffman founded Huffman Trucking in 1936 with a single tractor-trailer. The growth of the company was the direct result of World War II and the increased demand for carrier services between factories in the Midwest to ports on the East Coast.

By 1945, the fleet had increased in size to 16 tractors and 36 trailers. The business relationship forged with the U.S. Government continues today. Huffman Trucking continued to grow from internal sales and the acquisition of five Eastern regional carriers. This growth has enabled Huffman Trucking to continue to be privately held.

Our Company
Our Mission - To be a profitable, growing, adaptive company in an intensively competitive logistical services business environment.
Our Vision - To be a model company to our stockholders, employees, customers and all stakeholders.

Facts About Huffman Trucking

Huffman's primary customers include:

U.S. Government
Automotive parts suppliers to major manufacturers
Electronic consumer products
Raw materials (polymer) for manufacturers of plastic products
Any customer requiring special accommodations, such as wine, computers, munitions, etc.
Huffman has facilities in:

Cleveland, OH
Los Angeles, CA
St. Louis, MO
Bayonne, NJ
Huffman employs:

925 drivers
425 support personnel
Huffman owns and operates:

800 road tractors
2,100 45' trailers
260 "roll-on/roll-off" units

Huffman's rolling equipment undergoes preventative maintenance every 25,000 miles in the Cleveland, Ohio maintenance facility.

Huffman has been recognized as the 1st major freight carrier to outsource 100% of its information systems support.

Solution Preview

Huffman trucking is a privately held nationwide large company with many employees.

1. Initial Public Offering (IPO)

Let's discuss the first option for expanding. If the company goes public through an IPO, this will allow Huffman trucking to raise cash and being publicly traded will also open many financial doors. This cash can be used for expanding by establishing and adding new units which have potential to increase the sales. This will allow Huffman Trucking to increase its scale which will soon help the firm to buy raw material cheaper than before or sell its products cheaper while making enough profits and become market leader with the help of economies of scale. The freedom and flexibility to spend the capital will lead to increase in firm's growth rate, solid financial base and high level of liquidity. As a public company it can enjoy more prestigious profile compared to being called as private Limited Company. Besides the firm can get the tax concessions and deductions if it goes public.

On the other hand when the firm is listed in the stock exchange and there are ...

Solution Summary

This solution compares and contrasts three options for an organization's expansion and makes a recommendation about which strategy the organization should choose.

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