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Written assignment unit 6 bus 5111- Dottie’s Grocery Case Study.docx

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lOMoARcPSD|6961778Written Assignment Unit 6Dottie’s Grocery Case StudyFinancial ManagementBUS 5111University of the PeopleJuly 25 ,2021Dottie’s Grocery Case StudylOMoARcPSD|69617781
IntroductionDottie’s Grocery is a small company that provides a full-service grocery store chain withseveral stores in the city which requires additional funding of 23 million dollars in order toexpand the company. The family is considering two alternatives, either a publicly issue debt(corporate bonds) or common stock. In this case analysist, I will analyze the situation and makerecommendations to the company on the preferred choice of funding. The aim is to suggestoptions that will create equity value for the company and thus, maximize and preserve thecompany’s value.Capital can be sourced through bank and trade debt, equity securities, private securitiesand plow back (Don Mayer, 2012). We will mainly focus on how the company will raise fundsthrough the sale of stock or through bonds as these are the two options available for thecompany.The Initial Public Offering (IPO)Initial public offering (IPO) can be defined as the process whereby a private companyissues its first shares of stock for public sales. IPO is one of the ways a company can raise capitalfor its business operations and/or expansion and this is done through selling of shares or stockspublicly. Most businesses started as private companies that were financed by personal, family orfriends’ money before growing into big companies that are public. For a company to transit fromprivate to public ownership, its shares are traded to the public in the capital market. This processis managed by underwriters (investment bankers) who estimate set the price the IPO shares. One
of the key requirements for issuance of IPO is that the company must meet all the requirementsof SEC (Adam H., 2020).The IPO ProcessAccording to CFI, (2020) the IPO process takes about 6 months, and the steepsare categorized as follows:i.Select a bank: The issuing company will have to choose a bank with goodreputation, good quality research and expert in the industry.

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Term
Fall
Professor
Dr. Schmidt
Tags
Venture Capital, Stock exchange, Public company

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