Factors for Going Public Through an Ipo Essay

When an organization is private they have decisions to make. sacking public through an initial public offering, or IPO is one decision they coffin nail lead. When way out through an IPO there is going to be sum upd uppercase. A public offering give allow a lodge to raise capital to use for various corporate purposes such as working capital, acquisitions, interrogation and development, market placeing, and expanding plant and equipment (FindLaw, 2013). Other advantages of choosing an IPO would be liquidity, increased prestige, valuation, and increased wealth. WeaknessesEven though going public has some advantages, it displace also have some disadvantages too. The time and expense is probably one of the biggest disadvantages with this choice. It foundation take over a year and much money for fees to even start the process of an IPO. Other disadvantages to going public through an IPO would be disclosure, decisions based on carry price, regulatory review, falling stock price , and vulnerability. Disclosure is another(prenominal) part that can be costly when starting an IPO. That means that the organization has to make all financial records available to the public. OpportunitiesGoing public is a way to increase public sentiency of the fellowship. The company will have more exposure of its intersection point line. This awareness will increase sales because the product will be introduced to a new-fangled group of potential clients. An opportunity to increase clients will have an increase in market share. Investors will have a positive reaction to the company as it increases its market share. ThreatsAs a public company, there will be accounting practices that will need to be met. The SEC requires public companies to comply with the regulations. The cost to comply with SEC regulations can be expensive in addition to the regulations the SOX Act will require an external accounting firm to audit the company adding additional cost. Since Lafleur will now be operating as a public company, they will have the pressure to perform for the market. The actions of the companys management also become increasinglyscrutinized as investors constantly tactile sensation for rising profits. This may lead management to perform somewhat questionable practices in order to boost earnings (K. Balasubramaniam, 2009).Factors for acquiring another organization in the same industry StrengthsAn organization can also acquire another organization in the same industry. A major strength with acquiring another organization is that Lafleur Trading Company would be the owner of both organizations and would hold the power of both at the same time. The new organization loses its power and sometimes even loses the name. Acquiring another organization might be done to save the original smaller company while boosting sales for the larger company. If Lafleur would choose to keep the client list of the new organization it would be strength for them and those clients. The clients would still be able to receive the same products, but under new owners. With the new organization being in the same industry Lafleur would not have to buy any additional equipment for the new product. They could just bring the product over to their buildings. WeaknessesAcquiring another organization has its weaknesses too. Customers can become upset over this because they want to be loyal to the previous owners over the newer ones. Lafleur would have to profit a premium to the affiliate of the organization to keep the customers happy (if they can) and without upsetting cash flow. OpportunitiesThere is opportunity in a companys strengths. Lafleur can take advantage of the successes the acquired company has accomplished in the areas of product, marketing, research and development, and staffing. They can also avoid mistakes that have been made in the past. Using a synergy strategy in this process of acquisition will require Lafleur to be knowledgeable in the operations of the new company. ThreatsThe threat of acquiring another company in the same industry is in its customer base and product line. Lafleur may not be gaining new clients or offering new or improved products. The sales team may be making the same sales calls to the same customers the other company. In this scenario,Lafleur will be gaining the companys debt without the benefit of expanding resources for future growth. Merging with another organizationStrengthsMergers are different than acquiring a new organization because when two companies merge they work together instead of taking full control of the weaker company. Mergers can help both organizations while also benefiting the public. The new firm will have increased market share, which reduces competition (Economics Help, n.d.). The merger will help financially because the company will get a better interest rate for the size. Efficiency is strength for mergers because the companies can bring the more experienced employees from both organi zations together. An important strength of a merger is having diversity between the two original organizations. Other strengths would be research and development, avoiding duplication, and regulation of monopoly. WeaknessesMergers have weaknesses just standardised any other choice to expand the organization. Mergers mean higher prices for products because competition is cut when two organizations become one. A merger also means fewer choices of products for customers. One of the biggest weaknesses for a merger would be fewer jobs in each organization. This means that Lafleur would have to let go of some of their employees while the organization it mergers with would have to also let go of some. The employees that are left might experience diseconomies of scale. This means that the employees will feel like they are part of a big corporation and their motivation will start to go away. OpportunitiesOpportunity lies in a merger with a larger well known company. Lafleur will gain the ex perience of growth from a larger company. There is also the opportunity of better benefits, salaries, increased revenue, and the expansion of offices in other markets. There must be research to be done to choose a company that will aid in future growth. This company will need to be a worthy partner and not a company that needs a lifeline to survive. ThreatsIf a company does not have a growth opportunity on its own, it will not have growth opportunity when it merges with another company. The threat of Lafleur not benefitting from shared resources can result in failure for both companies. Another threat to a merger is mis-management. If the other company is poorly managed, Lafleur will suffer with unrealistic strategic goals, poor communication, and uncertain future success. It is because of these reasons that most companies do not experience more than one merger in their lifetime, they usually fail.Balasubramaniam, K. (2009). Advantages and Disadvantages for a Company Going Public. R etrieved from http//www.investopedia.com/ask/answers/06/ipoadvantagedisadvantage.asp