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IPO - Case Study Example

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ii) By terming themselves as an “emerging growth company” implies that the company expects to grow at about 5% to 10% per annum for the next 5 to 10 years to come. This therefore means that the growth of the company and therefore its earnings is gradual. In essence…
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IPO case study
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Download file to see previous pages Most companies and opinions believe that the new year brings forth the increased earning potential of shares. In addition to this, most companies pay out bonuses and dividends as the year comes to a close. This therefore means that investors might have funds to participate in the initial public offering.
v) The decision to involve the selected underwriters might have been well informed and carefully selected. The selected underwriters might have sent a positive message to the investors and therefore increasing their confidence and hope in the company’s prospective earnings.
vi) In my informed opinion, the cost charged was fair bearing in mind the positive past track record of the underwriting companies chosen. This therefore could have influenced positively the decisions of the investors to participate on the public offering. Investor confidence on the parties involved is all it takes for a success in the initial public offering. I therefore believe that the compensation was fair and appropriate.
vii) The overallotment offer to the underwriters acts like an incentive for them since they can use the overallotment funds to make some quick profits in the financial market as the allotment funds await to be returned back to investors.
viii) The choice of the company’s listing venue was appropriate. NASDAQ is one of the leading stock markets in the world. Therefore, any company that lists there is regarded and perceived as a potential goldmine for the investors. This therefore influenced positively the decision of the investors to participate in the initial public offer. In addition, the venue has different categories where issuing companies can list according to their interests and prospects.
ix) When companies issue shares to the public, the public is normally hopeful about the growth potential of the stock. This positive mindset and feedback might have resulted in an increase in the share price on the first day of trading. However, after ...Download file to see next pagesRead More
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