TRX, Inc.: Initial Public Offering

2017 ◽  
pp. 1-21
Author(s):  
Susan Chaplinsky ◽  
Kensei Morita ◽  
Xing Zeng
Keyword(s):  
Initial Public Offering ◽  
Ownership Structure ◽  
Best Interest ◽  
Going Public ◽  
Sequence Of Events ◽  
Business Opportunities ◽  
Public Offering ◽  
Strategic Reorganization ◽  
Dot Com ◽  
Comprehensive Coverage

This case provides comprehensive coverage of a firm's decision to undertake an IPO and the process of going public. The case follows the sequence of events from the company's incorporation in 1999 through the completion of an IPO in September 2005. In addition to raising capital, the TRX IPO case also includes consideration of another motivation for going public. At the time of its incorporation in November 1999, TRX attempted to go public but in the ensuing dot-com collapse, the IPO was never completed. In response to the failed IPO, TRX president and CEO, Trip Davis, turned to strategic investors to raise $20 million in a note convertible into equity at $11 per share. Although Davis had hoped the strategic investors would provide guidance and business opportunities for TRX, they never materialized. By 2004, he had come to believe that the largest strategic investor, Sabre, Inc., was not working in TRX's best interest. Thus, the IPO is motivated by a twofold purpose: to raise money and to provide for a strategic reorganization of the firm's ownership structure.

The Law and Economics of the Going-Public Decision

2018 ◽  
pp. 26-51 ◽  
Author(s):  
Jay B. Kesten
Keyword(s):  
Initial Public Offering ◽  
Law And Economics ◽  
Turn Of The Millennium ◽  
Going Public ◽  
Public Offerings ◽  
Secular Decline ◽  
The Law ◽  
Public Offering ◽  
Macroeconomic Determinants ◽  
Public Decision

An initial public offering (IPO) is one of the most important events in the life cycle of a developing firm. The decision to “go public,” however, is complicated by the persistently cyclical market for public offerings. This chapter analyzes the macroeconomic determinants of IPO market cyclicality alongside the strategic and corporate governance considerations faced by private firms, arising from the costs and benefits of going public. The law and economics of the going-public decision also are relevant to the secular decline in IPOs since the turn of the millennium. This chapter evaluates several competing and complementary hypotheses that attempt to explain this phenomenon, each of which relies at least in part on the various features of the going-public decision-making process.

scholarly journals The Deregulation of the Private Equity Markets and the Decline in IPOs

2020 ◽  
Vol 33 (12) ◽  
pp. 5463-5509 ◽  
Author(s):  
Michael Ewens ◽  
Joan Farre-Mensa
Keyword(s):  
Initial Public Offering ◽  
Bargaining Power ◽  
Private Equity ◽  
Market Failure ◽  
Securities Markets ◽  
Private Capital ◽  
Going Public ◽  
Number Of Factors ◽  
Public Offering ◽  
Securities Laws

Abstract The deregulation of securities laws—in particular the National Securities Markets Improvement Act (NSMIA) of 1996—has increased the supply of private capital to late-stage private startups, which are now able to grow to a size that few private firms used to reach. NSMIA is one of a number of factors that have changed the going-public versus staying-private trade-off, helping bring about a new equilibrium where fewer startups go public, and those that do are older. This new equilibrium does not reflect an initial public offering (IPO) market failure. Rather, founders are using their increased bargaining power vis-à-vis investors to stay private longer.

scholarly journals Signalling, Insider Trading, And Post-Offering Performance: The Case Of Initial Public Offerings

2011 ◽  
Vol 9 (3) ◽  
pp. 80 ◽  
Author(s):  
Thomas H. Eyssell ◽  
Donald R. Kummer
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Insider Trading ◽  
Going Public ◽  
Public Offerings ◽  
Corporate Insiders ◽  
Ipo Pricing ◽  
Public Offering

Previous IPO studies have concluded that, on average, (1) the shares of firms going public are underpriced at the time of the offering, (2) prices adjust rapidly in the aftermarket, and (3) IPOs are generally poor performers over the longer-term. This study reevaluates the IPO pricing phenomenon utilizing more recent data and empirically tests the signaling models of Leland and Pyle (1977) and Gale and Stiglitz (1989), which imply that both first-day and aftermarket returns may be related to insiders transactions. Our results suggest that initial returns are inversely related to the proportion of the offering representing insiders share and that corporate insiders are, on average, net sellers in the year subsequent to the initial public offering. We also find that the greatest volume of post-offering insider sales occurs in those firms in which insiders are sold shares at the offering.

scholarly journals Do Firm- and Board-specific Characteristics Corroborate Underpricing? A Study on the Indian IPOs

2019 ◽  
Vol 44 (1) ◽  
pp. 86-102
Author(s):  
Ramit Anand ◽  
Balwinder Singh
Keyword(s):  
Board Of Directors ◽  
Initial Public Offering ◽  
Ownership Structure ◽  
Emerging Market ◽  
Board Committees ◽  
Concentrated Ownership ◽  
Research Article ◽  
Time Period ◽  
The Board Of Directors ◽  
Public Offering

The present research article is an attempt to add something new and revalidate the influence of already existing corporate governance dimensions related to the board of directors on listing-day performance of the Indian initial public offering (IPO) firms measured through underpricing. Like other emerging market economies, firms in the Indian economy are also characterized by concentrated ownership held by an owner or a promoter in the context of the Indian corporate environment. In the backdrop of this concentrated complex ownership structure, the present study analyses the influence of the board of directors on underpricing when the appointment of such directors is largely an affair handled by such owners, whom they are given the task to monitor. The sample consists of 471 IPO firms which went public during the time period from January 2003 to December 2017. Results obtained from the regression analysis show that the board size and board committees act as information signals for Indian IPO firms having a significant and negative relation with listing-day initial excess returns. Other board-related dimensions of governance do not have significant influence on underpricing. Overall board variables have a very miniscule contribution in explaining the underpricing in Indian IPO firms.

Ownership and Operating Performance of Spanish Family IPO Firms

2020 ◽  
pp. 210-233
Author(s):  
Fuencisla Martínez Lobato ◽  
C. José García Martín ◽  
José Emilio Farinós Viñas
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offering ◽  
Ownership Structure ◽  
Family Firms ◽  
Operating Performance ◽  
Operational Performance ◽  
The Family ◽  
Spanish Family ◽  
Public Offering ◽  
A Company

Previous studies have shown the existence of a relationship between the ownership structure of a company and its operational performance. In this context, the empirical evidence reveals that after an initial public offering (IPO), companies experience a decline in their operational performance. In this research, the authors investigate whether the characteristics of Spanish family firms led to a different operating behavior with respect to non-family companies when they go public through an IPO. The results show that the particularities of the family firm do not turn into significant differences in operational performance after the listing process.

Business-Oriented Reserves and Resource Management - Experiences from a Merger

2021 ◽  
Author(s):  
Thies Dose ◽  
Gunar Kachel
Keyword(s):  
Control System ◽  
Resource Management ◽  
Initial Public Offering ◽  
Business Planning ◽  
Resource Information ◽  
Sequence Of Events ◽  
External Resource ◽  
Independent Evaluation ◽  
Definition Of ◽  
Public Offering

Abstract In May 2019, the merger between Wintershall GmbH and DEA Deutsche Erdoel AG was closed, which was the start of Wintershall Dea.This paper provides detailed insight into managing reserves and resource information during this merger. After merger, three resource management activities required attention: (i) combining existing resources reporting, (ii) defining a lean but effective resources management and control system, and (iii) ensuring readiness for Initial Public Offering (IPO) by establishing an external independent evaluation of resources ("external resource audit"). This paper describes objectives, challenges and solutions on reserves and resources reporting of the new company. The merged reserves and resources database of the previous year's reports had to consider audits from two different reporting systems in parallel to four different external auditors.With priorities defined by status of external auditing, operatorship and asset share a common database was derived and could immediately be used for financial transactions such as the issuance of an inaugural bond. The new system for internal reporting of petroleum resources provides a fit-for-purpose approach, such as a consistent interpretation of commerciality criteria or definition of resources sub-classes.Particular attention was paid to synergies with respect to business planning, strategic portfolio analysis, and a link to technology & innovation. By defining specific attributes and sub-processes, the portfolio can be analyzed systematically. This provides additional insights and ensures synergies with business planning, strategic planning as well as internal technology initiatives. A systematic resource control system is defined focusing on internal review, external and internal audits as well as synergetic use of project reviews. Moreover, a feedback loop for continuous improvement of reservoir management allows attending to important audit observations. The external resource audit to ensure IPO readiness was structured to assign tasks for head office, business units and auditing company.The sequence of events from introduction to assets to reconciliation of differences between auditor and company was set-up, executed and monitored.Focus was on the definition of a structured but agile approach for external independent evaluation of all reserves and contingent resources.

The Art of the Cap Table

2012 ◽  
Vol 18 (2) ◽  
Author(s):  
Ashley John Stevens
Keyword(s):  
Initial Public Offering ◽  
Ownership Structure ◽  
Biotechnology Company ◽  
Equity Ownership ◽  
Public Offering ◽  
Equity Ownership Structure ◽  
The Impact

This article provides an overview of the impact of raising capital on the equity ownership structure of a biotechnology company. The equity ownership structure as captured in a table of capitalization determines how the fruits of success will be divided between founders, management and investors at an exit event such as an acquisition or initial public offering. The evolution of the Cap Table is captured and described through multiple financing events and scenarios and illustrates how value is allocated to the various parties involved in the transactions as the company grows and develops.

Going Public in China

2018 ◽  
pp. 282-300
Author(s):  
Zijian (Vincent) Cheng ◽  
Grant Fleming ◽  
Zhangxin (Frank) Liu
Keyword(s):  
Initial Public Offering ◽  
Market Development ◽  
Return On Assets ◽  
Data Set ◽  
Going Public ◽  
Stock Market Development ◽  
Reverse Merger ◽  
Asset Turnover ◽  
Financial Characteristics ◽  
Public Offering

This chapter provides an analysis of companies undertaking a reverse merger (RM) as opposed to an initial public offering (IPO) on Chinese stock markets. It introduces a new data set of RMs on Chinese exchanges to examine the financial characteristics of firms that choose an RM over an IPO. The authors find that Chinese RM firms have lower liquidity, higher leverage, and lower asset turnover than firms that go public through an IPO. Promoters of Chinese RM firms also hold more shares as compared with IPOs. Finally, Chinese RM firms have higher return on assets and lower underpricing at listing. The results identify several characteristics of Chinese RM firms that differentiate them from firms that go public via an RM in Western markets, suggesting that Chinese institutions and stage of stock market development may impact the decision to go public.

scholarly journals IPO as a VC-Funds Type of Exit

2019 ◽  
pp. 99-129
Author(s):  
Dorota Podedworna-Tarnowska
Keyword(s):  
Initial Public Offering ◽  
Private Equity ◽  
Third Party ◽  
Going Public ◽  
Public Offerings ◽  
Advantages And Disadvantages ◽  
The Us ◽  
Portfolio Company ◽  
Venture Capital Firms ◽  
Public Offering

The key characteristic of private equity finance is that investors hold their investments only for a limited period of time. The key goal of VC funds is to grow the company to a point where it can be sold at a price that far exceeds the amount of capital invested. This process is called an exit or divestment. There are three basic types of exits: going public, being acquired by a larger corporation, a sale to a third-party investor.It is a widely believed and accepted proposition in private equity literature that the initial public offering of a private equity portfolio company is the most successful and profitable exit opportunity. However, according to the few sources of literature, public offerings are not the preferred divestment type for venture capital firms. Going public is one of the most critical decisions in the lifecycle of a firm. This is not easy, as the process is very comprehensive and complex. Hence, a lot of considerations should be taken into account. Because every investee firm is different, a development plan to achieve a successful exit takes into consideration a number of macroeconomic and microeconomic factors. Moreover, several advantages and disadvantages of exit through an IPO could be indicated. The objective of this paper is to show the success and profitability of going public by VC funds. The VC’s exit type as a way of cashing out on its investment in a portfolio company is a consequence of the exit strategy, which means the plan for generating profits for owners and investors of a company. While an IPO is the most spectacular and visible form of exit, it is not the most common one, as historically in the US it was, but still in Europe it has not been yet. There will be both literature and statistical data coming from different studies and reports used in this research.

scholarly journals R&D spending and sources of funding of private US biopharmaceutical firms seeking to go public

1969 ◽  
Vol 16 (4) ◽  
Author(s):  
David R Williams ◽  
Richard W Pouder
Keyword(s):  
Venture Capital ◽  
Initial Public Offering ◽  
Strategic Alliance ◽  
Positive Relationship ◽  
Going Public ◽  
External Sources ◽  
Alliance Partners ◽  
One Year ◽  
Public Offering ◽  
The Relationship

This study analyzes the relationship between the amount of research and development (R&D) spending in private US biopharmaceutical firms before they go public and whether or not these firms tap into external sources of funding for investment before an initial public offering. We focus our study on three specific sources of funding (venture capital investors, biopharmaceutical firm investors and strategic alliance partners) for two different time periods (one year prior to firms going public and cumulative years prior to going public). We found an increase in R&D spending over the course of the study and a positive relationship between R&D spending in the year prior to its going public and venture capital involvement. We also found a positive relationship between the cumulative amount spent on R&D and venture capital involvement and ownership by other biopharmaceutical firms. We use the literature on tradable assets and signaling theory to interpret the implications of our findings. For managers, the results suggest that if their goal is to send signals to future investors by way of spending greater amounts on R&D in the year prior to going public, then venture capital investors are more likely to be associated with this type of activity.

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