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Written Assignment Unit 06.pdf - BUS 5111: Financial...

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BUS 5111: Financial Management - Written Assignment Unit 6University of the PeopleMBA ProgramBUS 5111: Financial ManagementWritten assignment - Mergers, Buy-Outs, Initial Public Offering (IPO) Process, Functionsof Money, and the Financial ManagerMarch 2022
BUS 5111: Financial Management - Written Assignment Unit 6IntroductionDottie’s Grocery is a small company that provides a full-service grocery store chain with severalstores in the city, which requires additional funding of 23 million dollars in order to expand thecompany. The family is considering two alternatives, either a publicly issue debt (corporatebonds) 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 securities and plowback (Don Mayer, 2012). We will mainly focus on how the company will raise funds through thesale of stock or through bonds as these are the two options available for the company.The Initial Public Offering (IPO)Initial public offering (IPO) can be defined as the process whereby a private company issues itsfirst shares of stock for public sales. IPO is one of the ways a company can raise capital for itsbusiness 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. Underwriters(investment bankers) who estimate set the price the IPO shares manage this process. One of thekey requirements for issuance of IPO is that the company must meet all the requirements of SEC(Adam H., 2020).The IPO ProcessAccording to CFI, (2020) the IPO process takes about 6 months and the steeps are categorized asfollows:1. Select a bank: The issuing company will have to choose a bank with good reputation, goodquality research and expert in the industry.

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Term
Summer
Professor
N/A
Tags
Venture Capital, Stock exchange, Public company

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