FIN 370 Week 4 DQ 3

FIN 370 Week 4 DQ 3 - historical share price performance...

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Discussion Question(s) #3 Please reply to this thread by or before Sunday, day 6 with your answers! What is an IPO? How does an IPO allow an organization to grow financially? When is a merger or an acquisition, instead of an IPO, more appropriate? What is an IPO? IPO means the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market. http://www.investopedia.com How does an IPO allow an organization to grow financially? Initial public offerings (IPOs) are unique stocks because they are newly issued. The companies that issue IPOs have not been traded previously on an exchange and are less thoroughly analyzed than those companies that have been traded for a long time. Some people believe that the lack of
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Unformatted text preview: historical share price performance provides a buying opportunity therefore allowing for more cash for the organization. When is a merger or an acquisition, instead of an IPO, more appropriate? If an organization has the right services and products to grow but does not have the capacity to attain the right level of output, an IPO would present the best way to grow because it will give them the capital they need to reach their potential. In contrast, if a company can scale its own products or services to meet demand but is held up by an inability to deliver a complementary or dependent product or service, a merger with or acquisition of an organization that delivers the product or service in question would be the most beneficial way to grow. The company would immediately attain the people, tools, and operational structures needed to supplement its own offerings, allowing it to flourish in the market without a long period of growing new capabilities in-house....
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