March 29, 2012
Virtual Organization-Riordan Manufacturing
Riordan Manufacturing, a privately held company, is solely owned by Riordan Industries and manufactures plastics globally including plants located in Albany Georgia, Pontiac Michigan, and Hangzhou China with the organization’s corporate headquarters located in San Jose California. Riordan wants to expand its operations and management is looking at three different options for achieving this expansion that includes going public through an initial public offering (IPO), acquiring another organization in the same industry, or merging with another organization. Outlined are the three expansion options along with effects, factors, and global exchange rates from each choice as well as a comparison and contrasting description. Going Public Through an IPO
If Riordan is considering going public with an IPO, the organization should first consider selecting and hiring an investment banker, “a middleman who brings together investors and firms” (Mayo, 2012, p. 37), even though an investment banker is usually not a banker but instead part of a brokerage firm. An IPO is a way for corporations to bring in new funds by selling securities on the open stock market to willing investors. Depending on the organization’s history and stability some brokerage firms will give a “firm Commitment,” guaranteeing a specific amount of securities sold that means that the underwriters buy the securities and resell them on the open market (Mayo, 2012, p. 37).
For Riordan, considering the option to go public is a good way to bring in new money by seeking investors to buy stock in the company on the stock market and there is potential for substantial growth through public offerings. The decision to go public through an IPO is a risk for Riordan because the company is not known on the market and investors may be hesitant to invest their money in unknown...