TRX is known as a “behind the scenes” travel-processing service company. The company focused on managing travel and data processing activities for its clients so they could focus mainly on their core businesses. As it became a world-leading travel technology and data services provider, it offers services and utilities for online booking, reservation processing, data intelligence, and process automation. TRX generated revenue primarily from three service offerings: transaction processing, data integration, and customer care. In 2004 TRX increased it revenue to $113.4 million up from $63.2 million. However, despite this strong growth in revenue the company still had not reported positive earnings. Trip Davis, Chief Executive Officer of TRX, Inc. was making another attempt to take the company public since 2000 after the unexpected dot-com collapse. Davis believed that the company needed to grow further to avoid the continuous losses and hence shift away from the low margin customer care business. Davis determined that it was time to raise capital to fund the future growth of the company and at the same time, he wanted to achieve a strategic recapitalization of TRX. Davis believed there were three possible capital raising options: 1)IPO – which is defined as the first sale of stock by a company to the public 2)Private placement of equity
3)Private placement of debt
**options 2 & 3 are defined as the non-public sale of bonds or securities to a chosen small number of investors Ultimately, Davis determined that the IPO seemed to be the best option for TRX. The offering proved to Davis the benefits of providing equity capital for the company and facilitating future access to the public markets, as well as offering liquidity to the minority shareholders. This was the option Davis chose for TRX.
The U.S. technology IPO market experienced a slow start in the beginning of 2005 following a strong fourth quarter of 2004 but by May the NASDAQ began to rebound....