Kudler Fine Foods - Strengths and Weaknesses of an Ipo

Strengths and weaknesses of an IPO

“An IPO is the first sale of a private company’s stock to the public” (US Equities, 2012, Para. 1). An IPO can provide Kudler Fine Foods greater access to capital, which is useful to pay debts, finance acquisitions, fund marketing, invest into research, or fund expansions. An IPO can increase Kudler Fine Foods liquidity, providing the opportunity to attract and retain employees as well as increase investor confidence. An IPO can increase Kudler Fine Foods level of respect and public recognition, allowing it to reach a bigger market to offer products and services as well as securities. In addition, often the founders of companies that go public experience increased financial wealth.

A weakness of an IPO is time and cost. An IPO can take one year or longer to prepare and its costs can reach the hundreds of thousands. Possibly causing an IPO to be unaffordable or too time consuming for Kudler Fine Foods. Another weakness of an IPO is the SEC disclosure rules companies are required to follow, which are extensive and force public companies to subject to regular SEC reviews. Nevertheless, if caught violating the rules, companies can face fines, lawsuits, company closure, and jail time for those involved in the violation. Another weakness of an IPO is falling stock prices, which could cause Kudler Fine Foods to lose its market confidence and company value. Losing value may affect its “lines of credits, secondary offering pricing, the company's ability to maintain employees, and the personal wealth of insiders and investors” (U.S. Equities, 2012, Para. 2).

Strengths and weaknesses of acquiring or merging with an organization

An acquisition occurs when “a company buys a business and takes control of it, whereas; a merger occurs when a business integrates with another business and shares control” (Business Link, 2012, Para. 2-3). When