Corporate Finance

Running Head : Valuation

Corporate Finance exam

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Question 1 (a ) What are the main issues an entrepreneur ought to consider when deciding whether to take his /her company public and make an initial public offering (IPO

Answer1

Going public is when an entrepreneur sells of the ownership of His or Her company on the public market say a stock exchange . Selling shares of a company in an initial public offering (IPO ) is an elaborate process that takes considerable months of planning . After

entrepreneurs sell their shares , they no longer work for themselves but they work for shareholders , a myriad of unseen investors who have a vested interest in the success of the company . As it has been observed , IPO share prices may ride like a roller-coaster thus may not be easy . In addition , going public may not be the right strategy for most Small Medium Enterprises (SMEs ) or midsize companies . The stock market is nothing short of a fickle . However , successful IPOs fundamentally share some characteristics . When an entrepreneur has decided that going public is the right strategy , the following common denominators are resourceful when preparing a company for an IPO

There should be a strong network of the major stakeholders of the company . These include loyal customers , industry allies , and the community . These pools of individuals and institutions are the most probable shareholders for the company

Second , the entrepreneur needs to have an excellent management team this boots investors ' confidence . Manager (s ) should have remarkable...