Fin/370

Going Public Through an IPO

An IPO, which stands for initial public offering is the first sale of a company's stock to the public. There are many advantages to this approach for Mcbride Financial Services. The most important and usually the motivator to going public is to raise capital which can be used to fund research and development or even to pay off existing debt. ("Investopedia, n.d.). Another advantage is so that the company can get a little more exposure or advertising of the company due to the publicity of going public generates. This can generate more interest in the company by potential new customers which could lead to an increase in the market share for the company. It also places an increased value on the company as well. On the flip side of the coin some of the downsides to an IPO that Mcbride Financial Services may encounter is that the company may need to add disclosures (Investopedia, n.d.).. Due to the act, companies will have to start reporting their finances and this can be difficult for companies just going public and may be unfamiliar with the complexities of financial reporting, the scrutiny of being monitored and the expense that comes with complying with the regulatory requirements. Since the Sarbanes-Oxley Act was implemented the cost of complying has only increased. There can also be an increased risk of exposure to the company or executives for making false or misleading statements in the registration statement. ("Disadvantages", n.d.). Companies should evaluate the pros and cons of going public in order to make an informed decision.

Just like and IPO, acquiring another company within the same industry has its advantages and disadvantages. Companies can decide to acquire another business within the same industry as a strategic move to sure up market share advantage. The company may also feel that they can increase prices since they have reduced the competition. There could also be a cost saving advantage by eliminating duplicate...