As pointed out previously, Huffman Trucking has experienced tremendous growth over the past few years. Our huge trucking fleet and large number of employees exceed the usual numbers for a privately held trucking company. The growth of our company has become so significant that we must now face the issue of expanding our business. Even though our expansion can be done in many ways, our financial team has narrowed down our expansion options to becoming a publicly shared company (through an IPO), acquiring another organization in the same industry, or merging our business with another organization. Expanding our company in any of the for-mentioned ways can have many advantages for our owners and employees. In order to determine which expansion option to take we must/will weigh the pros and cons of each. Going public through an IPO
After our last annual strategic planning session we have a clear view of where we will be in three years and we agree on key strategies for building our future business. “Going public” is an easy way for us to raise cash and will open many financial doors. Our most recent statement of income declares we have an annual net income of $59,167. Even though our income may not appear strong enough for an IPO, qualifications for being listed have changed. Strong financials are no longer necessary. Because our underwriters think an IPO will be a success for us, we can and will be listed. Let’s consider the strengths and opportunities of going public through an IPO. Even with our current debt, going public will grant us access to capital through selling shares. Our debt-to-equity ratio will improve after going public, making for more promising financing engagements. By becoming a publicly traded company we can offer stock as a bonus, incentive, or part of an employee contract. This will help to ensure the retention of some important employees. We can also use this equity to purchase other businesses. The shares that we own after the IPO can...
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