The General Value of the Shares - Essay Example

Name of Student: Institutional Affiliation: Instructor’s Name: Date: Bps technology limited listed on September 2014 controls the largest trade exchange in the world. One of the main reasons of seeking listing by this company is its market value (Churchill & Lewis, 1983). The general value of the shares in the market has made the company to search for listing in Australia. The other reason for seeking listing by this company is competition (Confederation College, 2002). The firm is Global Wealth Partners Limited listed on 26th October 2014. One of the main reasons for seeking listing by this firm is seasonal factors. The other reason for seeking listing in exchange is the capital requirements. Whereas Holmes et al (2003) states that earning history is not important during listing in Australia. The two firms require takes the earning history as very essential during listing. Both BPS and Global Wealth Partners limited used the profit test when they were seeking for listing in stoke exchange. The amount of capital owned by these firms needed by the law for listing meets the minimum requirements. While these two firms values the seasonal factors, there is nowhere in the notes where seasonal factors have been mentioned (Barclay & Glasgow, 2008). Provided the company still makes profits is a clear indication that can be listed. The general value of the shares is very essential during listing mentioned in both the notes and the two firms. Capital requirements are also considered in both firms and are well stated in the notes. The IPOs in Australia can specify minimum and maximum number of shares to be issued in prospectors (Churchill & Lewis, 1983). When listing the firm, the numbers of shares are well divided among the shareholders to see their profitability. Whereas the market value is very essential in BPS during listing, the number of shares is the most important during listing as per the notes. Question two. According to Churchill and Lewis (1983), firms grow in stages with age. Each and every stage is characterized by diversity, size and complexity. All these stages are described by some factors such as the organizational structure, managerial style, major strategic goals, extent of formal systems and the involvement of the owner in the business (Churchill & Lewis, 1983). Bps technology limited for instance is in the growth stage in that it has established itself as a business entity and the main problem is to get enough cash flow to sustain itself as a firm. Bps, was therefore, listed this year because of its stable growth (Vernon, 1996). The firm is making maximum profit and is expanding and hence is in the growth stage as per the Churchill and Lewis model of 1983. The Global Wealth Partners Limited listed on the other hand is in the success phase as per the Churchill and Lewis model 1983. The firm is stable and profitable and the key decision making process lies in the hands of the managers aimed at using the firm as a growth platform (Vernon, 1996). It is at this stage that the professional managers must take some responsibilities off the owner of the firm. According to five stage model by Churchill and Lewis, the firm can continue to run at a status quo. For instance, the Global Partners Limited, the recruitment for future firm needs required to run the systems have been installed thus is in a maturity stage (Yazdipour, 2013). The owners of the firm are still involved in the main strategic planning’s and hence clear indication that the company has not reached the revival stage (Barclay & Glasgow, 2008). The take off stage is reached by the company after the successful stage thus retaining the entrepreneurial spirit. The business chain will only stop when the business dies. Question 3 As growing companies, both BPS and the Global Partners Limited took advantage of over prising to brand their products and services in their prospectus. BPS for instance has priced its shares $1.25 and $ 1.70while on the other hand, the Global Partners Limited issued its shares at 0.03 and 0.05. The other strategy used by the issues to meet their targets is the proper use of the closing dates (Tracy, 2013). BPS technology limited closed on 4th September 2014 while Global Partners limited closed at 26th September 2014. The information asymmetry existing within the firms is the main reason as to why the issuers used this signals. The employees and the management team working within the firm are aware of the information unlike the outsiders (Barclay & Glasgow, 2008). The lucrative activities available at the particular periods in time depend with the information within the firms as per the IPO offers. Retention of capital within the firms by the owners to the outside investors is the other important signal (Thaler, 2005). This enables the inside investors to invest heavily due to the signal that the coming season might have a high returns. Leaving some key activities to the team of experts is the other important signalling mechanism the issues within an IPO uses. The level of debt was lower during listing than never before in that the listing is done to stable companies to fit the exchange rate. The listing was done to both firms due to their stability because they had little debts (Churchill & Lewis, 1983). There is no security exchange willing to list a company with bad debts or even huge debts hence the listing took place during the lower debts levels in both firms (Vernon, 1996). The main source of debt for the BPS technology limited is the loans from banks and other money lending agencies within Australia. The other source of debt is the borrowings from the employees of the firm who fail to repay the loan due to their financial inability and some issues like death. For the Global wealth partners limited, the main source of debt is the loans from banks (Barrow & Institute of Directors, 2006). This emerges during expansion of the firm and its transition from single ownership to being managed by the team of experts due to its growth. The sources of debt from both firms are consistent with those expected from the firms which deal with the same activities at the same levels (Thaler, 2005). The strategies laid down by the management team should be long term and must meet the expectations of the stake holders for smooth running of the firms. References Barrow, C., & Institute of Directors (London). (2006). Financial management for the small business. London: K. Page. Barclay, L., & Glasgow, F. (2008). Small business finance all-in-one for dummies. Chichester: John Wiley. Confederation College. (2002). Small business finance. Toronto: Productive Publications. Churchill, C., & Lewis, V. L. 1983. The five stages of small business growth. Harvard Business Review 61(3): 30-50. Thaler, J. (2005). The elements of small business: A lay person's guide to the financial terms, marketing concepts and legal forms that every entrepreneur needs. Los Angeles, CA: Silver Lake Pub. Tracy, J. A., & Tracy, T. C. (2013). Small business financial management kit for dummies. Hoboken, N.J: John Wiley & Sons. Vernon, L. (1996). Directory of operating small business investment companies sbics. S.l.: Diane Pub Co. Yazdipour, Rassoul. (2013). Advances in Small Business Finance. Springer Verlag. Read More