Aspects of the Initial Public Offering Many in the younger generation that were not previously interested in the stock market, began to take notice of what it means for a company to go public when Facebook made their public debut in 2012.This generation uses Facebook daily, if not hourly, to stay in touch with friends and family and stay in tune with the world and now they can watch its shares and shareholders increase or decline in value. The decision to go public for a business is not a simple task. Given the private nature of the founder of Facebook, the decision to go public could not have been an easy decision. Given the time and money involved in the going public process, no company would make this decision hastily. All businesses are different and not every business will make the …show more content…
In order to determine if a public offering is appropriate, the owners must analyze both the advantages and disadvantages to going public. Primary advantages include increased access to capital funds, establishment of a company value, attraction of quality personnel, assistance in mergers and acquisitions, and creation of a household name (Schneider, Manko, & Kant, 1981). The advantages clearly focus on the money and growth that can be gained by going public. The disadvantages to going public include primarily the high costs associated with the process although there are additional drawbacks. Disadvantages to going public include mandated disclosures of private information, reduction in company flexibility and loss of control, market price impacts on company decisions, and estate tax implications (Schneider, Manko, & Kant, 1981). The decision to go public is difficult for many businesses to make; however, by analyzing the advantages and disadvantages surrounding such a decision, owners can make the decision that is most advantageous for the
Capital access threats: Since it is a closely held company financial information is limited and if the company is not doing well it may find it difficult to access funding from financial institutions.
In 1985, the U.S. Food and Drug Administration (FDA) passed a ruling to allow direct marketing to consumers as long as the pharmaceutical companies included warnings about possible side effects and other dangers. This change allowed for print-based marketing such as magazines, but in 1997, the FDA lessened the requirement for detailed warnings. Furthermore, the FDA ruled that TV ads containing only the main dangers of the drug were permissible, and this resulted in an inundation of the direct-to-consumer advertising on television. “One study showed that for each dollar of direct-to-consumer advertising on TV by the pharmaceutical company during 1999-2000 resulted in a return of $4.20 for each dollar spent. By 2005, the pharmaceutical industry spent over one billion on TV ads” (DeGeorge 319). Based on these facts, the advertising is paying off for these large pharmaceutical companies.
This transformation process begins with an Initial Public Offering (IPO), which in most cases is a very difficult and intensive process (Phung, 2006b). An IPO is a formal, regulatory procedure that involves extensive documentation and is followed by a process of changes a company must go through in order to attain public status. The three phases include a pre-IPO transformation phase, an IPO transaction phase and a post-IPO transaction phase (Phung, 2006b). Running a publically-traded company is a completely different playing field which requires a company to restructure their management practices, organizational procedures and corporate governance (Clarkson, 770). Above all, shareholders must aim to maximize the company’s value by enhancing its growth strategy and projected profits in order to persuade investors to trade purchase shares. Completion of the pre-transformational phase will normally take about two years (Phung,
P/F/426.Review of theories on initial public offeringThe paper examines the process of initial public offering (IPO) in a firm's life cycle reviewing literature on the concepts of under-pricing, information asymmetry, retained equity, venture capital equity, underwriting, auditor reputation, etc. Criticism of the signalling theory is provided.
Many times a company is looking to expand its operation or may be seeking to go on a completely different direction than when it was first funded. This can be done by both a publicly traded company and a non-publicly traded company, which is also considered a private company. When a private company does go public is known as an initial public offering (IPO). Whatever the status of the company, though both benefits and drawbacks to issuing additional shares of stock. One obvious drawback is known as diluting the ownership of existing shareholders by reducing their actual ownership in the company on a percentage
The process of doing this cased the company to ask for help from other competitors about the exact price to offer in the market. Investors knew that the price might be among 22 to 24 per share. However, the JetBlue noticed that the IPO demand is anticipated to be more than 5.5 million. Thus, the management requested to increase its price to 25-26, this would make the management concerned to convince the shareholders that the higher price improve the company in the market. Furthermore, the company was scared if this strategy would hurt sales in future. They should decide if the higher price would improve company technique in stock
It is also, of course, a handy way of raising capital without having to cede majority control of the company. Indeed, for the few that have achieved genuine nation-wide market share in their industries, there is little choice but to go public or offer stakes to strategic investors if they want to continue expanding.
When a company decides to go public and has made the decision to offer the IPO, they usually do this to raise capital for company expansion and for future investments. This is how the company is looking for new financial resources, by looking for external investors to raise more capital. This is a common thing for up and coming technology IPO’s such as SnapChat.
Facebook announced that they allowed third- party apps like Cambridge Analytica to receive personal data from many of their customers. This started a scandal that extremely hurt their business. This breach is a business issue because on a business standpoint, this can lead to a loss of customers. This is because customers are going to be afraid of their data getting stolen without their consent. In addition, people do not like to be with companies that do not have their best interest in mind. This also can cause Facebook to lose money. Their customers can decide to deactivate their accounts and every account related to Facebook such as the popular application, Instagram. Also, stockholders may not have appreciated the bad publicity,
How would you like to see your favorite band have a commercial with your favorite artist and your favorite song from them? Often artists have left the album selling scene and have gone towards advertisement for their music. For artists to make money off their music they go towards music sponsorship and advertisement.
IPO is a method for companies to raise expansion capital, however, it is also used by insiders as a tool to maximise their personal wealth. According to the theory developed by Aggarwal et al. (2002), managers underprice IPOs on purpose to raise higher profit from selling stocks at the expiration date. The IPOs that are underpriced on the first day attract the attention of the analysts therefore generate information momentum and change the demanding curve of the stock. The generated information momentum change the share price to peak around the expiration date which allow the managers to maximise their personal wealth through selling shares.
The term ‘comparative advertising’ refers to that form of advertising in which the advertiser attempts to favorably compare the attributes and features of his product, service or brand with those of his competitor’s. Comparative advertising, in one form or another, has been around for over a hundred years. Since time immemorial, traders have looked to sway consumer opinion in their favor by portraying their products in positive light while comparing them with rivals’. However, given the contentious nature of the topic, there was little, if any, research interest in the subject until the early 1970s when the Federal Trade Commission (FTC) in the United States (U.S.). started encouraging comparative advertising in a bid to boost competitiveness
Schofield (2014) researches the difference between public and private company financial reporting. For instance, a private company has fewer consumers reviewing their financial statements, whereas public companies could have multiple consumers reviewing financial statements. In addition, private companies typically have less specialized accounting personnel, whereas public companies will have several. Lastly, Schofield (2014), reviewed the number of amendments proposed and finalized to help benefit private companies financial reporting.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.
Advertisings are very important for the companies to promote their products to masses. The first billboard was appeared in 1450’s and the companies still using it until today. They would use the billboards to post their posters. That can let the people pay attention or remember their company. Moreover, billboards are started to change in the society. Most of them are using technology billboards as they can make the costumers more interested in advertising such as they would use the LED screens and cameras to scan the costumers and give them the advertising which is the most suitable for them. On the other hand, some places still using neon light billboards to promote their company name on the high street such as Japan and Hong Kong. One of the reason is they can keep their style and they are highly prominent for the costumers. However, they are not useful then the digital advertisings. Digital advertising can give more information to the costumers and it can put different posters in the same time and some of them can more interactive with the costumers. Thus, this article is going to find out why costumers are more prefer digital billboards then the traditional one, and what element let it works to promote the advertising.