Strengths of IPO
Going public through an Initial Public Offering, or IPO, could be a great way for Berry’s Bug Blasters to raise a substantial amount of cash very quickly. This infusion of cash, if managed properly, could help their company expand into other geographic regions or expand their service offerings. They could use this cash, which they would otherwise not have, to purchase the necessary equipment to improve their pest treatment services. For example, by investing in “greener” pest treatment chemicals, they may be able to tap a new market and have a broader appeal. Also, this cash infusion could help them accomplish their other idea of purchasing a company in the same industry, thereby growing their stock value even further. With revenues in the neighborhood of $3.25 million in 2008, they may be reaching a ceiling of sorts in their current market. With just $818,000 in cash, it may be difficult for them to purchase a competing company that will add substantially to their yearly revenue. Strengths of Purchasing a Company
By acquiring another pest treatment organization, Berry’s Bug Blasters could achieve some of the same goals as going public. That is, if they chose the right company to purchase, they could also expand their service offerings and geographic locations they serve. The company being acquired may also have skilled people who can add to their success as well as equipment and/or chemicals that have already been purchased. Since their revenues were around $3.25 million in 2008, it may be difficult for them to expand within their current market without eliminating some of their competition. Purchasing a competing company could help them to increase their market share and eliminate some competition. The only challenge may be where to the come up with the money to buy the company given their cash balance of $818,000. Strengths of Merging with a Company
Merging with a company may be a good option for Berry’s Bug Blasters because it...
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