Finance for Business 370
March 21, 2012
Integrative Problems and Virtual Organization Strategy
Team A has been assigned the task of examining expansion methods for the Riordan Manufacturing Company. Team A will perform an evaluation of the strengths, weaknesses/limitations, opportunities, and threats relating to the challenges of going public through an Initial Public Offering. Team A will draw a conclusion concerning the success that the Initial Public Offering process will bring to Riordan Manufacturing Company and how the Initial Public Offering status will allow Riordan Manufacturing Company to maintain their position as leaders in the plastic production industry. Strengths of an Initial Public Offering
In an Initial Public Offering (IPO) Riordan Manufacturing Company would trade their stock for the first time. This sale would provide an influx of capital that could be used for: exposure, prestige, and improved public image; creating equity, convertible debt, and less expensive bank loans; research and development; expansion purposes, and updating technology. There is also the prestige factor, says James S. Rowe, a securities partner with Kirkland and Ellis LLP, "The fact that you're a public company gets you in the door with vendors and suppliers and prospective business partners” (Wasserman, 2010, page 1) Weaknesses of an Initial Public Offering
“Going from a private to a publicly traded entity can expose significant added expenses exhausting Riordan Manufacturing just in associated fees, advertising, and legal wrangling, not to mention claims upwards of “15 to 20 percent of the stocks total initial value” (Money, 2012, Para. 3). “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 “(Money, 2012, Para. 1). The fees associated with taking a firm public could cost possibly the...