Initial Public Offering (IPO) is defined as the first sale of stock by a company. Companies like AVG (http://www.avg.com/ca-en/homepage) looking to further their growth often use an IPO as a way to generate the capital needed to expand. AVG is uniquely positioned to spearhead innovation in the industry thanks to its employing of some of the world's leading experts in software development, threat detection, threat prevention, and risk analysis. You can read more by accessing the following information source:
PR Newswire AVG Technology (2012). AVG technology announces filing for proposed initial public offering. Retrieved May, 2012, from http://www.avg.com/ca-en/press-releases-news.ndi-3521 ; http://www.avg.com/ca-en/homepage
Do some reading up on the online IPO process used by Google and Morningstar using the CyberLibrary and internet search engines. This is an un-traditional approach to the IPO, and may or may not be the best approach for the AVG's IPO. Carter, A. (2005). Morningstar follows Google's lead.
1) What type of IPO should AVG use - a traditional IPO or an online auction? Based on your analysis and findings, what would you recommend to the executives of AVG? Please explain your reasoning in detail.
To answer the above question, please include responses to the following issues together with other issues that you think are important:
- The type of investors AVG is likely to attract
- The lessons learned from Google and Morningstar from their auction IPO's
- Advantages of each type of IPO
- Costs of each type of IPO (e.g., US Securities and Exchange Commission fees, stock brokers' commission, other fees, etc., but how much? Please provide numbers and ratios in the paper.)
- Risks of each type of IPO
2) What do you perceive you have learnt in this Assignment? Which of the following learning objectives do you feel you have mastered?
- Describe the steps a firm must take in order to go public
- Identify success factors for a firm making the IPO decision
- Discuss and analyze the different types of IPOs
About the company:
AVG "was founded in 1991 with the express purpose of protecting people around the world using the latest in cutting edge security technologies. AVG gained success quickly and is now recognized as one of the biggest players in the security software market. AVG currently holds corporate offices in Europe such as in the Netherlands, Czech Republic, Cyprus, UK, Germany, France; in the US such as in the Pensacola area in Florida, San Francisco Bay Area in California, Atlanta area in Georgia, Boston area in Massachusetts, Charlotte area in North Carolina; in the Middle East, in Israel; in Asia such as Beijing and Hong Kong in China." (1)
IPO is one of the ways of raising long term finance. The main ways in which an organization can find long term finance for its business are:
- Retained earnings
- Bank loans
- Money from an informal network
- Assistance from government bodies
- Equity via public issue, private placement, stake sale
There can be broadly two categories of financing: internal and external sources of finance. " Internal sources of finance are generated from the business itself (e.g. cash from sales) and external sources of finance from outside the business (e.g. a bank loan)." There is a need ...