Week 5 Paper- Fin/370 Finance for Business

Since 1994, Smith Systems Consulting (SSC) has serviced its clients every need. From corporate websites and local database to complete network packages, Smith Systems has proven it can get the job down. With its success Smith Systems has decided to grow and expand. Should SSC expand with an IPO, by acquiring a competitor, or merging with another organization? There are advantages to each. In an IPO, SSC would be able gain capital very quickly. This would allow SSC to immediately build new facilities, purchase new equipment, and hire more employees. This would give SSC the necessary resources to be a major player in the information systems industry. By becoming a public company, SSC will have a higher profile in its industry offering an advantage with sales (Keown, 2005). An IPO would also allow SSC owners to gain more liquidity since public shares are more easily bought and sold (Keown, 2005). In an question SSC would purchase and take control of another company in its industry. This method of growth has some distinct advantages. It would allow SSC immediate access to new equipment, facilities, and customer list. In an acquisition, SSC will be able to avoid barriers and have quick access to the new resources. In a merger, SSC would blend its resources, capital, and assets with another business in the same industry. This method of growth would offer tax shields; strengthened financial statements without a large investment list an acquisition, and reduce competition in the industry. A merger would also SSC to grow and benefit both parties involved.

References

University of Phoenix. (2010). Smith Systems Consulting. Retrieved from University of Phoenix, FIN370- FInance for Business website.

Keown, A. J., & Martin, J. D. (2005). Financial Management:Principles and Applications. Upper Saddle River, New Jersey: Pearson Education, Inc.