University of Phoenix Riordan Manufacturing Riordan Manufacturing is a global manufacturer with projected annual earnings of $46 million. The parent company Riordan Industries Incorporated is a Fortune 1000 enterprise. The company specializes in manufacturing plastic beverage containers, custom plastic parts, and plastic fan parts. Manufacturers from the automotive, aircraft, appliance, as well beverage makers and bottlers are major customers. The Department of Defense is also a significant customer. Continuous growth is important to Riordan. In 2000, the company expanded its operations in China.
The corporation now wants to consider other expansion options. This paper will evaluate the following expansion options: Going public through an IPO, acquiring or merging with another organization. Going Public through an IPO An Initial Public Offering (IPO) is the first time a company issues stock to the public. According to Bateman and Snell, “Initial public stock offerings (IPOs) offer a way to raise capital through federally registered and underwritten sales of shares in the company” (2011, pg. 255).
There are various advantages to going public. An IPO may raise capital, reduce debt, improve the balance sheet, and enhance net worth.
Riordan may be able to pursue unaffordable opportunities and improve credibility with customers. Investors may be attracted to the company now. The disadvantages include the expense, time, and effort involved. Riordan’s finance and accounting department does not have a consistent method for maintaining corporate data files. Recordkeeping between each division is not seamless. When going public corporate governance and internal controls are significantly audited under the Sarbanes-Oxley Act. The Securities and Exchange Commission (SEC) requires financial statements be prepared using the Generally Accepted Accounting Principles.
The Essay on Investment Bank Ipo Public Company
IPO Basics The term 'IPO's lipped into everyday speech during the tech bull market of the late 1990 s. Back then, it seemed you couldn't go a day without hearing about a dozen new dot-com millionaires in Silicon Valley cashing in on their latest IPO. The phenomenon spawned the term ',' which described the dot-com entrepreneurs in their early 20 s and 30 s who suddenly found themselves living large ...
Implementing these changes is expensive. The company may become more interested in the stock price and capital gains. An IPO will require a long-term relationship with an investment-banking firm. This relationship may not always be a good one. A global IPO enables Riordan to take advantage of greater financial development, economic development, and institutions of foreign countries. When the U. S. markets are unstable or unfavorable, the company can borrow from foreign institutions. Whether borrowing from private investors or investment banking firms, exchange rates affect the outcome.
Exchange rates play a vital role in a country’s level of trade, which is critical to most every free market economy in the world. An IPO needs investors. Interest rates may concern investors seeking a balance between yield returns and safety of funds. Higher interest equates to higher yields and lower rates may cause investors to use other currency. Local currency financing eliminates the potential currency mismatch between a revenue and debt. The World Bank offers local currency guarantees or contingent loan instruments to protect investors and lenders.
