B 501 Case 1

 FIN 501 Case 1 Essay

Early last summer season, Avaya manufactured the announcement that it might file for an IPO in the future. While there will be a lot of prep and concern that goes in this process, a great emerging decision that businesses must also produce is whether to utilize a traditional or perhaps online public auction IPO. There are pros and cons to each type of GOING PUBLIC and each technique may or may not be suited to the needs and goals of a company. Several inquiries must be answered prior to the starting. What kind of profit may be the company trying to make? And what income can they realistically expect? What goals could they be trying to meet up with by processing for an IPO? Who have do they need to offer stocks to? Will a traditional IPO fulfill their demands? Is a great auction IPO better? By answering these, a company can easily navigate the task to meet the requirements and those with their investors.

Avaya is an internationally respected and good communications network organization. This will be the other IPO in Avaya's history, yet that doesn't mean that the original method of processing will always work for them this time. The regular IPO, which usually Avaya employed its first-time around, gets the potential to make upfront and committed investors. However , the Dutch approach opens up Avaya to a bigger consumer basic by permitting anyone to bid on and purchase shares. Banks stand a lot to lose in this technique because of the loss in underwriting costs and they also lose the power of selecting which traders to allow usage of the GOING PUBLIC (Carter, 2005). The power would be in Avaya's hands. Avaya will pay out less money towards the banks underwriting the IPO. However , their investors may not see because the total earnings in the beginning days of the IPO because the inventory prices are more steady and nearer to market price. This can be a pretty solid contrast for the tumultuous starting days that many traditional IPOs experience. However , since Avaya is looking to pay down financial debt by going public, it could be to their advantage to...

Referrals: Carter, A. (2005). Morningstar Follows Google's Lead. Business Week. Media Analysis, January 10, 2006

Gelsi, H. (2005). Google IPO public sale made sprinkle. Retrieved twenty one February, 2012, from http://www.marketwatch.com

Hensel, D. (2005). Will be Dutch Online auctions Right for Your IPO? 21 February, 2012, from http://hbswk.hbs.edu/archive/4747.html

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