...What Are the Weaknesses of a Private Company Going Public? Taking a private company public can be a celebratory time for owners and management. It is the reward for years of successful business practices and positive consumer reception. Taking a company public can also expose significant weaknesses in a company that is unprepared to weather the added financial burdens and loss of control that come with life on the stock market. Distracted Management The process of a taking a private company is a long, complicated affair that can take as long as two years to complete, according to the Reference for Business website. This may open weaknesses in companies that lack good infrastructure directly beneath management. As a result, the daily running of the company and ground-level business decisions could suffer, which could affect the bottom line and consumer confidence when heading into life as a public company. Cost and Exhaustion Taking a company public is expensive -- costing between $50,000 and $250,000 just in fees and publicity costs. This can expose a weakness in funds for some companies that are not prepared to handle the initial financial burden. According to the Reference for Business, a company's initial public offering costs could claim 15 to 20 percent of the stock's total initial value. The process of taking a company public is also exhausting with time taken up meeting with lawyers, accountants and various business model personnel. The process can be so involved...
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...LJB Company Going Public To: The President of LJB Table of Contents * Introduction * Sarbanes-Oxley requirements with publicly traded companies * Effective procedures currently being used * Conflicts and recommendations * Conclusion * Bibliography To: President of LJB Company After reviewing the information provided on LJB Company I have concluded that there are internal controls that must be in place according to Sarbanes-Oxley before taking the company public. The company is on track with some of the procedures that were listed; however, there are also many procedures that need to be put into place to eliminate conflicts. LJB Company has much to work on with internal control before becoming a successful public company. After so many scandals came to light in the early 2000s many new regulations were created to help protect investors. The Sarbanes-Oxley Act of 2002 was created to prevent and detect fraud within public companies. SOX requires that public companies maintain an adequate system of internal controls in the company. “Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.” (Kimmel 337) LJB Company would need to set in place internal controls that would be acceptable per SOX prior to taking the company public. LJB Company is taking a few...
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...2011 2 ABBREVIATIONS AND ACRONYMS AFC ALM BIS CIC-ND-SI Asset Finance Company Asset Liability Management Bank for International Settlements Systemically Important Non-Deposit Taking Core investment Company Capital Market Exposures Certificate of Registration Commercial Paper Capital to Risk Weighted Assets Ratio Commercial Real Estate Financial Companies Regulation Bill Foreign Direct Investment Investment Company Inter Corporate Deposits Infrastructure Finance Company Initial Public Offering Insurance Regulatory and Development Authority Joint Parliamentary Committee Know Your Customer Loan Company Liquidity Coverage Ratio Lender Of Last Resort Micro Finance Institution CME CoR CP CRAR CRE FCRB FDI IC ICD IFC IPO IRDA JPC KYC LC LCR LOLR MFI 3 M&A NBFC NBFC-ND-SI Mergers and Acquisitions Non Banking Financial Company Systemically important Non Deposit taking Non Banking Financial Company Deposit taking Non Banking Financial Company Non Deposit taking Non Banking Financial Company Non Banking Financial Institutions Non-convertible debentures Net Owned Funds Non-Performing Asset Over-the-counter Public Financial Institution Priority Sector Lending Reserve Bank of India Residuary Non Banking Company Return on Assets Return on Equity Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Scheduled Commercial Bank Securitisation and Reconstruction Companies Securities and Exchange Board of India Statutory Liquidity Ratio Small and Medium...
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... Private Companies • Sources of Funding: – A private company can seek funding from several potenNal sources: • Angel Investors • Venture Capital Firms • InsNtuNonal Investors • Corporate Investors 14.1 Equity Financing for Private Companies • Angel Investors: – Individual investors who buy equity in small private firms – The first round of outside private equity financing is oSen obtained from angels 14.1 Equity Financing for Private Companies • Venture Capital Firms: – Specialize in raising money to invest in the private equity of young firms – In return, venture capitalists oSen demand a great deal of control of the company Figure 14.1 Most AcNve U.S. Venture Capital Firms in 2009 (by Number of Deals Completed Figure 14.2 Venture Capital Funding in the United States 14.1 Equity Financing for Private Companies • InsNtuNonal Investors: – Pension funds, insurance companies, endowments...
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...Public perception refers to the conscious understanding that people have of public and official issues. In many cases, the perception of a situation that may be defined as crime or not, is affected by cultural bias or prejudice. -Exchanging money for sex between two consenting adults: It is illegal in many countries, including the United States what we know as prostitution. Prostitution is the act or practice of engaging in sexual intercourse for money. Many women do it against their will, while others do it for necessity, but either way is still viewed as illegal by the law. In my opinion, prostitution contributes to the use of more illicit drugs, more deaths, and rapes/abuse of woman. Giving someone money for sex, whether they are prostitutes or not, to me it is considered illegal because you are paying for sex to someone that does not like you. Sex between adults should be for pleasure and not for money....
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...Lit Review – Public and Private sectors The public sector as defined by the Business Dictionary as being part of the national economy and provides goods and services that cannot otherwise be provided by the private sector (Business Dictionary, 2014). Examples of these goods and services range from the procurement of electricity, to cleaning services, and water management to name a few. The public sector's main focus is that of service delivery (The Student Room, 2014). Due to human induced climate change many governments have requested their public sectors to change and optimize their supply chains to cater for green purchasing. As a result of this the majority of the European Union have effectively found ways to reduce the overall effect of their purchasing activities (European Union, 2010, page 1 paragraph 1). The procurement of public goods and services in the EU is done through the life cycle approach (European Union, 2010, page 3 paragraph 1). The life cycle approach that is used by the member countries of the European Union has 5 steps (Europa, 2014), the fifth step that has been added in recently deals with all the externalities that can occur while performing the assessment. In the United States, the Environmental Protection Agency (EPA) use the more traditional four step approach to evaluate the life cycle of the goods and services to be procured (EPA, 2014). And in South Africa there is a nine step evaluation method on how procurement of public goods and services...
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...growing corporation into further debt by taking out loans. Plus the bank will probably hold more of the share in the company. Also 4 billion dollar is a substantial amount of money having to pay back and could put stress on the organization if any financial situations ever aroused. Taking out this loan will have more people accountable for the company’s wealth. The only thing positive about doing this is that Merit is probably guaranteed to receive the money that they are asking. The biggest drawback is creating debt with multiple debtors. Public corporations are capable of raising capital from an IPO, as employees or individuals buy shares in the company, since public corporations are publicly listed on a stock exchange. This is the most significant advantage of a public corporation. In addition to the ease of raising capital, public companies may issue their securities as compensation for those that provide services to the company, such as their directors, officers and employees. While private companies may also issue their securities as compensation for services, the recipient of those securities often have difficulty selling those securities on the open market. Securities from a public company typically have an established fair market value at any given time as determined by the price the security is sold for on the stock exchange where the security is traded. Going public will result in increased capital for the issuer. A public offering places a value on your company's...
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...says this is a paradoxical situation because graffiti culture earned its strength and popularity in 1970s to get back the public spaces from advertisers with the slogan “reclaiming the streets.” He says advertisers and brands can’t reach out to young generation with old version of advertisements, like TV ads and radio spots. Fuchs used advertising professional from TBWA agency how this guerilla marketing is so popular and effective because this way can surprise people when they don’t expect advertisements. Rising of guerilla marketing made advertisers and brands to poach...
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...Vioxx Decisions – Were They Ethical? In the late 1990s, a pharmaceutical company called Merck was a leader in this industry. The pharmaceutical industry required millions of dollars and great amounts of time to be invested in research and development. From 1995 to 2001, Merck was successful in releasing 13 major drugs into the market. One of these drugs was one that would treat rheumatoid arthritis. The drug, Vioxx, acquired the approval of the Food and Drug Administration (FDA) in May 2009 (Cavusgil, 2007). Vioxx became one of the top five selling drugs in the market in the next five years. However, Merck pulled the drug from the market on September 30, 2004 due to increased observations of cardiac arrest and stroke in many consumers. Merck faced an ethical dilemma when it found increased observations of cardiovascular problems in patients. However, it took many years for the company to pull its top selling drugs from the market. The ethical issue, the interested parties and solutions will be addressed in the following paragraphs (Brooks & Dunn, 2012). Ethical Dilemma As in many industries, the pharmaceutical industry has great competition. Vioxx was competing successfully with Pfizer’s products, Celebrex and Bextra. However, Merck’s product was especially thriving because, unlike Celebrex and Bextra, Vioxx did not contain naproxen. This ingredient is harmful to the gastrointestinal system (Cavusgil, 2007). By 2003, Vioxx gained revenue for Merck that reached $2.5 billion...
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...mainly three options for expansion when a company is privately held and wants to expand their operation. This paper will discuss three specific options that a privately held company would have if they were to expand. First of those options would be to go public through an IPO or Initial Public Offerings. The second option would be to acquire another organization in the same industry in order to expand the business. The third and final option being to merge with another organization. With all three of these options having strengths and weaknesses, this paper will discuss some of the strengths and weaknesses of each and what opportunities may arise from each approach as well as the threats. Other things that this company may want to consider when looking to expand are the effects of globalization on the company's financial decision as well as the factors that contribute to exchange rate risks. Finally ending the paper with mitigating the exchange rate risk. Going Public through an IPO Taking a business public or better known as participating in an initial public offering is a process where the business is offered to the public by selling stock of the company. In turn, these stocks represent a partial ownership in the company to the individuals that purchase the stock. One common step in deciding whether or not to take a company public it is always best to speak with an IPO consultant to help determine the market prospects for the company before proceeding. Acquiring another Organization ...
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...Stone going public? II. Conduct your own analyses to estimate the value of Rosetta Stone. How do these values compare with the current range? III. If you were part of the underwriting syndicate, what price would you recommend for the offering? IV. Should Mark invest in the IPO? V. What alternatives to the IPO might be available to the company? I. Advantages & Disadvantages of Going Public The main advantages of Rosetta Stone going public are that an IPO would allow them the capital to expand their business into new markets as well as build on the Rosetta Stone brand. The IPO would also help them establish business credibility as a public firm. As a public company, Rosetta could enhance their image and reputation with newfound capital. It may also be advantageous to proceed with an IPO as the market has shown encouraging signs after the crisis of 2008. Changyou.com, a video game developer recently went public at 6.5 times EBITDA. Likewise, Bridgeport Education has recently considered going public and estimates that they could do so at a range of 10-12 times EBITDA. This may indicate that an IPO would behoove Rosetta Stone as it would be a successful business decision. Furthermore, the language learning industry largely consists of self-study learning as it counts for $32 billion of the $82 billion industry. Going public would allow Rosetta to be a major market presence in a booming industry. Another advantage of taking Rosetta Stone public is Adams’ concern...
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...Having a successful business and maintaining good business ethics is hard work. Taking the business internationally is more work and can affect many stakeholders that are associated with the company. Stakeholder groups that may be affected by expanding the Aerodynamic operations are the CEO of Aerodynamics, Inc., the public relations officer, employees, customers, business partners, and shareholders. Before taking Aerodynamics, inc. to China there are many aspects to look into before taking a company internationally. Regulations have to be checked, facilities have to be built, and who potential clients may be and what they might be looking for in our company. The CEO has a lot of influence in the company, because the CEO is the person is responsible and liable on any legal issues. The CEO is the person who employees go to with every problem, so they have the capability of influencing the company on ethical and legal issues. The public relations officer is in charge of any media whether good or bad. They must give the company a good representation towards the company at press releases and if there is a problem with the company that gets to the media, the public relations officer must know what the problem in order to know how to explain what the company is doing to fix the problem, like making a negative into a positive. Employees are mildly affected, they are just told what to do and they must follow the regulations and ethics affected. There are going to be different regulations...
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...by the tanker Exxon Valdez spilling more than 10 million gallons of crude oil. This incident caught the attention of the public and received many and different criticisms. Eight of eleven cargo tanks were ruptured during the incident. ARLIS or Alaska Resources Library and Information Services with the help of Exxon Valdez Oil Spill Trustee Council released a collection of materials on Exxon Valdez Oil Spill. It included the following information: * The crude oil spread approximately 1, 300 miles. 200 miles were heavily oiled. The impact was obvious while the remaining 1, 100 miles were lightly or very lightly oiled. * Aerial observations were used to determine the size of the oil spill to give immediate response and clean-up activities. It includes the estimation of the thickness and volume of oil on the water. * Exxon spent more than $2.5 billion on clean-up expenses. * Caption Joseph Hazelwood was the captain of the ship, a senior officer. He was convicted of a misdemeanour charge of negligent discharge of oil, fined $50, 00 and sentenced to 1, 000 hours of community service. * Exxon was fined $150 million, it was the largest fine imposed for an environmental crime. The court forgave $125 million in acknowledging Exxon’s cooperation in cleaning up the spill. During the clean-up, Exxon hired thousands of workers through several companies. There were more than 11, 000 workers, 1, 400 vessels and 80 aircraft involved. No one knows how many animals died and were...
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...Management and Control of the Corporation Kenneth Weddle LEG 205 Strayer University Professor John Taulane September 2, 2015 Shareholders, as the owners of the corporation, are entitled to many legal rights. The most important goal of the corporation should be wealth appreciation for shareholders and many times this is not codified in a specific legal right (Velasco, 2006, p. 409). More often these rights need to be specified in the corporation’s incorporation documents or bylaws. Velasco (2006) describes the right to vote and elect directors and the right to sell stock as the “fundamental rights of the shareholder.” Additionally shareholders have financial rights as well which must be spelled out within the corporation’s bylaws. In a modern, publically traded corporation, it is impossible to for shareholders to set overall business policy or determine strategic direction of a corporation, much less manage the day to day operations of the corporation. Corporate statues, in all states, provide that the board of directors will manage the affairs of the corporation (Hamilton, Macey, & Moll, 2010, p. 405). One of the most important rights that a common shareholder has, as an owner of the corporation, is the right to vote for directors. Most publically traded corporations have traditional voting for directors, in where one share of stock equals one vote for each share owned for each director nominee. Cumulative voting allows for minority shareholders to elect directors...
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...stakeholders using the six-step ethics issue resolution process. Defining the Issue In the fall of 1982, McNeil Consumer Products, a subsidiary of Johnson & Johnson, faced a crisis that claimed the lives of seven individuals in Chicago, Illinois. After two local firefighters who were home listening to his or her police radio, discovered that the information retrieved from each incident involved the consumption of Tylenol. After testing, the remaining Extra Strength Tylenol capsules retrieved contained 65 milligrams of cyanide poisoning. This was considered 10,000 times more than what was needed to kill someone. After the connection was made between the seven deaths and Extra Strength Tylenol, Johnson & Johnson had to find an avenue to make public this awful finding. However,...
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