Financial Strategy for Kudler Fine Foods
Kudler Fine Foods is a privately held upscale specialty food store, located in the metropolitan area of San Diego. Currently the company has three locations in La Jolla, Del Mar, and Encinitas. Kudler stores have a fine selection of bakery and pastry products, fresh produce, fresh meat, seafood, condiments, packaged food, cheese, and specialty dairy products. Each of the stores has a domestic and imported fare. The owners at Kudler are exploring ways to expand the organization and maximize profits. The three options for expansion are going public through and IPO, acquiring another organization in the same industry, and merging with another organization. This paper will list the three options and provide the strengths, weaknesses, opportunities, and threats of each approach. Going Public Through IPO
According to Financial Management page 413, the disadvantages of going public through the means of an initial public offering (IPO) have a variety of weaknesses. New IPO companies have the filing of periodic reports with the Securities and Exchange Commission (SEC). IPO involves time, and the revealing of company information that competitors use for advantages. The private equity investors have to share new capital with the public investors. The private investors loose a degree of control when going public. The cost of going public is expensive to the extent of spending 15-25% of the money raised on the IPO. The company founders may want to sell his or her shares through the IPO, but this is not allowed a period. Everyone involved with the IPO face legal liability for the actions of each owner. The owners face lawsuits from the IPO prospectus should the public market valuation fall below the IPO offer price. According to Financial Management, acquiring another firm in the same industry has variables with multi-faucet advantages and disadvantages, depending on the execution of the plan. “Businesses grow in one of...
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