The Huffman Trucking Company was founded in 1936 with only one tractor-trailer. The Company grew because of World War II; it boosted the need for carrier services between factories in the Midwest to ports on the East Coast. In 1945, the business had grown in size to 16 tractors and 36 trailers. They still have a business with the U.S. Government today. Huffman Tucking Company has been acknowledged as the first major freight carrier to subcontract 100% of its information systems support. The business has continued to grow from internal sales and the purchase of five Eastern regional carriers. We will discuss how going public through an IPO, acquiring another organization in the same industry, and merging with another organization. We will discuss the strengths, weaknesses, opportunities, and threats of each approach. If Huffman Trucking Company were to go public through an Initial Public Offering (IPO) the advantages would be beneficial for the company whereas it would allow the company to raise money by selling stock to the public. Going public through IPO would also allow the stock from the company to be traded on the open market like other commodities. IPO is a quick way to raise a lot of cash for your company as well as open financial doors that were previously unavailable. “As long as there is a market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal.” (Staff, 2014) Also there is a social prestige associated with being on a major stock exchange that Huffman Trucking Company will benefit from. If Huffman Trucking Company were to acquire another company in the same industry, basically purchase another trucking company, the advantages would also be beneficial. One of the major benefits would be a reduction of cost because of the economies of scale. Basically, if there are two different trucking companies and both were owned by the same person the ability to “enhance economies in the industry, larger entity, along with increased efficiency in production and other aspects of business operations.” (Black, 2013) Another benefit would be the expanded market reach and the tax and legal implications. If Huffman Trucking Company decided to merge with another organization it would increase its customer base by merging the customers of both companies for the overall benefit of the combined company. The merger should bring an increase in business, stimulate growth and bring a larger diversity to the trucking industry. If the company ever goes public the merger should also increase the value of the stock as well as the company’s worth on the open market. An organization faces several threats when considering an Initial Public Offering (IPO) of stock. The first threat is the increased scrutiny and financial compliance associated with a public company. At a minimum an organization must have three fiscal years of audited financial statements that are subject to review. Additionally the officers of the company are required to meet Sarbanes-Oxley (SOX) requirements. To meet the compliance requirement an organization will incur substantial costs that will diminish profits. Along with the compliance requirements there will be changes to the management structure and decision making process. Early investors in the company may require seats on the board of director for firm and will have input into decisions; this could be negatively impacting to the nimbleness of the company. Changes in the company’s performance because of the internal changes and costs will affect the company’s stock price, adding the threat of market pressures. Acquiring an organization in the same industry also includes several threats. The most significant threat to completing an acquisition is having sufficient capital or financial resources to secure credit to complete the acquisition. If the acquired company will continue to operate as an...
References: Huffman Trucking. (2013). Retrieved from
Staff, I. (2014, 02 19). Investopedia Personal Finance. Retrieved 02 22, 2014, from Investopedia :
Black, C. (2013, 04 02). Business Models & Organizational Structure. Retrieved 02 22, 2014, from Small
Please join StudyMode to read the full document