Case

Background:

TRX is a world-leading travel technology and data services provider offering more than 20 software-as-a-service utilities for online booking, reservation processing, data intelligence, and process automation. They provide patented savings maximization solutions via our travel analytics consulting practice, extending spend management services to travel buyers all over the world. TRX complement all of these offerings with a global workforce focused on travel process automation and re-engineering.

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 strong growth in revenue the company still had not reported positive earnings.

Trip Davis, Chief Executive Officer of TRX, Inc. and 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, hence shift away from the low margin customer care business. 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. The IPO backlog remained flat in the range of $3.7billion to $4.5billion half the amount a year ago, with the expectation of better market conditions ahead was one of the reasons that prompted Davis to file a S-1 for TRX in May 2005. The proposed IPO would be a total of 6.8 million shares of common stock, 50% primary share and 50% secondary shares with no proceeds from the sale of the secondary.

I. Statement of Problem

Davis long term strategy for TRX was to focus on the higher margin data- transaction and integration sectors. As reported in the fall of 2004 TRX was generating double digit top-line revenue growth but was still negative in net income.

Relationships with the two minority investors Hogg...