Broadvector Limited and Energio Limited - Public Definition of Small Business - Case Study Example

1. Many companies had issued prospectus on the ASX two such companies are Broadvector Limited and Energio Limited. Broadvector Limited is a “Company which is functioning in the biotechnology sector and aims at the condition of the ageing population”. (Broadvector, 2010) The company looks forward to improve the condition of aged people by improving treatment in the field of cancer and prosthetic implants. This is done as the population of Australia is ageing and it provides an opportunity of growth. Energio Limited is a company which “develops and distributes toys, games and other related toys in Australia”. (Energio, 2010) The company also looks into the wholesale aspect of distribution and has its presence in different countries. 2. A look at the business model of Broadvector Limited and Energio Limited suggest that Energio Limited was working as a small business unit which was growing and increasing with public confidence. Broadvector Limited on the other hand was a company which is also small considered to some major players but is shaping itself fast as can be seen from the financial statement. (Broadvector, 2010) The growth of both the companies highlights the manner in which both Broadvector Limited and Energio Limited have used their limited means to grow and looks towards the public for future finances. Broadvector Limited and Energio Limited are considering going to the public and raising money from shares because of the high public confidence they have acquired. Apart from the public confidence it also helps to achieve certain advantages by raising money from the public. The advantages are Increased consumer confidence will act as a corner stone which will make it easy for the companies to raise money for projects which they have acquired. Going public would also enable the liability of the of the company is limited “to the amount contributed by the shareholders and their individual property cannot be used to pay for the liability which arises in the due course of the business”. (George, 2010) The company has an advantage “to raise further capital up to the authorised limit by issuing shares to the public thereby giving an alternative to fund projects”. (George, 2010) This provides the company a global stature and provides an opportunity to tap the other markets and make consumers more aware about the company and its prospects. 3. The IPO of Energio Limited has not been underwritten which is a concern as the IPO can fail if the public doesn’t subscribe to all its shares. Broadvector Limited on the other hand doesn’t provide any information relating to the underwriting of IPO as the company is still slated to release the IPO in the public. Broadvector Limited highlights various issues in their prospectus to lure the issuer. Their IPO highlights the different clinical trials and new projects the company has, the different risk associated with this projects, the regulatory requirements, funding of the projects, expenses on clinical trials and the return expected. (Broadvector, 2010) It also throws light on matter related to the financial statements. The prospectus also speaks about the changes in technological development the company is looking forward to. Thus it presents a case for the IPO to be underwritten but hasn’t been done till now as no information to the same has been provided. Energio Limited highlights various important issues like the manner in which the funds will be used in different research projects. The prospectus also throws light on the manner in which the distribution network will be solidified and ways which will ensure supply to every nook and corner of the country. (Energio, 2010) This presents a case where the IPO should have been underwritten but hasn’t been underwritten. 4. Broadvector Limited and Energio Limited have used various signalling devices which will help the investors to gauge the potential the company has and make their decision based on those. These signalling devices will act as a guide for the investor and facilitate decision making. Energio Limited has provided details regarding the manner in which the company intends to use the funds in research and distribution programme. Details regarding the dividend and transfer of shares to special category like creditors have also been provided for. The company has also ensured that the safety of investment has been considered and the risk factors addressed through their signalling device. (Energio, 2010) Broadvector Limited has provided details regarding the ageing population and the manner in which the company looks forward to device strategies to combat cancer and transplant in the ageing population. Also information relating to their growth potential and risk diversification has been accounted for. The financial information regarding the performance up till now also provides an opportunity for the investor to think on line of investing in the company. (Broadvector, 2010) Signalling is used by companies to ensure that “correct information regarding the growth and potential the company is passed on to the public so that there is equality of information with the company and public”. (Michael, 1998) This will give the investor a clear idea regarding the future prospects of the company and the manner the company intends to use the funds thereby showing safety of their funds. The other signalling devices which both the companies could have used are basic earnings per share and the time frame analysis to show the manner in which the company will realize back profits. This will help the customer to have a better idea about the future prospects and give better direction. 5. Energio Limited and Broadvector Limited can be considered as a small business unit as there are certain criteria which this business meets thereby helping to quantify them as a small business unit. The following definition of small business enterprise will help to further develop an understanding of small business enterprise. Small business enterprises are those “which are not business leaders and are owned and operated individually and have a limited turnover and the employees of those business units are low compared to big business houses”. (Peterson, Albaum & Kozmetsky, 2006) Energio Limited and Broadvector Limited are not market leaders in their own field which satisfies the criteria for being a small company. The companies are looking towards ways to improve their performance so that they match the standards of bigger companies but at the present moment the company is a small one. Broadvector Limited and Energio Limited is looking forward to use the positives of their respective industry and use it as a tool for future growth and is looking towards converting themselves in a big player in the industry. The number of employees in Broadvector Limited and Energio Limited are few compared to big business enterprise making it a small business enterprise. Still when we consider the overall structure it shows that both the company are looking towards increasing their foothold in the industry which will make them hire new employees but the present scenario makes them small business enterprises. Thus Broadvector Limited and Energio Limited are small business unit looking towards consolidating itself and is looking to raise money so that they are able to fiancé for future projects easily. References Energio Limited, 2010, “Energio Limited Prospectus”, ABN 28 001 894 033, ASX George S, 2010, “Selecting a business structure”, Texas Secretary of State, Texas Michael F, 1998, “IPO Profit forecast and their role in signalling firm value and explaining post listing returns”, Journal of Applied Financial Economics, Volume 8, Issue 1, page 29-39 Peterson R, Albaum G & Kozmetsky G, 2006, “The public definition of small business”, Questia Journal Article, Journal of Small Business Management, Volume 24, page 47-56 Broadvector, 2010, “Broadvector Limited Prospectus”, ACN 128 447 692, ASX Read More