Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
Hyde Piper Story:
The Hyde Piper is a residential-turned-industrial pipe cleaning and repair firm located in Hyde County, North Carolina. While the firm was initially a residential pipe cleaning and repair company, it changed its emphasis and relocated to Texas after receiving more requests for industrial applications. The management of the firm includes Will Drayne (principal owner), Harris Tock (Chief Financial Officer), and Conlan DeWitt (the vice president of marketing). Before relocating to Texas the annual income of The Hyde Piper grossed to $1-2 million every year. However, since relocating to Texas and focusing on industrial applications, the company generates in excess of $50 million annually and has huge contracts with oil and gas refineries. Hyde Piper's Expansion:
As previously mentioned, the main reason for Hyde Piper's expansion and relocation to Texas from North Carolina was because of the huge number of requests for industrial applications that the company received. The expansion not only enabled the firm to generate huge income annually but it resulted in major contracts with oil and gas companies as well as enabling crews to travel nationally in order to service major metropolitan water systems. Moreover, through these expansion strategies, the company adopted cutting-edge technology to troubleshoot pipe interiors and identify cracks, leaks, and blockages easily. This contributed to the company's work being efficient and cost-effective.
Generally, the expansion of the Hyde Piper Company also increased overhead as its management developed a solid core of skilled workers in such a specialized industry. The development of the solid core employee base was also characterized by the decision by the owners to match the salaries offered by the firm's largest competitors. In March 1983, the company's principal owner was at the crossroads since his decision to match and even better competitors salary had not convinced his top crew manager to remain with the company. The top crew manager left the company arguing that his decision was motivated by opportunities for growth and interest in X-Act rather than money. In addition to interviewing candidates for the Chief Financial Officer position, the principal owner started to explore going public.
As the firm's owner had known for a long period of time that taking The Hyde Piper public was likely to occur because companies of national stature had little choice, he did not like losing control of the firm he had considered as his baby. While the company was not in any financial troubles, the decision to go public would offer opportunities for continued growth through providing funds that are necessary for pursuing important business acquisitions. Moreover, going public would enable the firm to provide stock options to high-ranking or top performing employees. The main problem for The Hyde Piper firm in its quest to go public due to the numerous advantages and benefits of an IPO was that the time was not right.
Even though the decision to go public was not out of desperation, the company needed to do so in order to promote continued growth of its operations. Since the timing of this decision was not appropriate, there was increased need to schedule for the Initial Public Offering when the time was suitable. The unsuitability of the time for the Initial Public Offering was based on various factors that were identified by the Chief Financial Officer.
Strategies used in the Inside Story:
An Initial Public Offering can be considered as with which companies that need capital for growth sell ownership stakes to investors who trust the future prospects of the company. In most case, this process usually involves the sale of the shares of the company's stock in relation to the established rules and regulations (Pott, 2000). There are numerous benefits associated with going public including exposure and prestige, facilitate acquisitions, enhance and diversify equity base, facilitate acquisitions, create several financing opportunities, promote cheaper access to capital, and attract and retain best employees and management. However, the ability of a firm to realize the benefits of going public is dependent on various factors including the timing of the IPO and the underlying economic conditions.
For The Hyde Piper Company, the main problem or issue associated with going public was the timing of the initiative. Consequently, the strategies that could help in resolving this issue was mainly associated with ensuring that the IPO was carried out at the right or appropriate time. In order to schedule the Initial Public Offering when the time was appropriate, the Chief Financial Officer, Harris Tock, employed various strategies. First, Tock positioned the firm as a company that would benefit from going public and as an attractive firm to investors. In order to create that perception, he advised the management to upgrade most of its equipment while maintaining its image as a technological leader. This strategy would help in demonstrating its financial strength and structure the balance sheet for an attractive IPO.
Secondly, the company's top management developed a formal plan as the backbone of the appeal for going public. Through this plan, the perfect hook for going public was provided by the contingency as the firm needed the investors to buy. Third, the firm worked on its operations through hiring a major accounting company to audit its finances for the previous three years since The Hyde Company's finances has been managed by CPA. In addition to helping the company organize and meet the standards needed by the public sector, the external audit would help determine the initial share price through providing accurate income figures. Moreover, the audit also enabled the top management to standardize record keeping and become thorough about financial accountability and reporting.
At the time when The Hyde Piper Company considered going public, Texas was experiencing a dismal economic environment that forced the firm to hold off and wait for a market upturn. The strategies adopted by the company to prepare for the IPO proved to be successful because of the significant benefits it brought to the firm when it finally carried out the IPO. Even though the stock did not sell out, it exceeded the minimum by some thousands of shares as the wise counsel by the Chief Financial Officer ensured a successful IPO. Through the IPO, the firm bought X-Act Solutions, made various vertical acquisitions, and satisfied the principal owners, employees, and investors.
Alternative Strategies for Preparing for an IPO:
For many companies and businesses, going public is more than an initiative of merely selling stock but a symbol to the business world that the firm has made it (Wasserman, 2010). As a result, undertaking an Initial Public Offering has been the ultimate goal for many entrepreneurial businesses and companies. However, if the IPO is not carried out at the right time or when the economic environment is dismal, companies can soon find themselves struggling to transit from the seemingly loose environment of being privately-held to a closely scrutinized and highly-regulated environment of a public company ("Prepare for an IPO," 2005). In order to ensure that the initiative is carried out at the right time and under favorable economic conditions, there are various strategies for preparing for an IPO.
For The Hyde Piper Company, the main strategies adopted under the shrewd counsel of its Chief Financial Officer were putting the right management in place, upgrading its financial reporting systems, and developing a draft prospectus as the backbone of going public. While these strategies were successful due to the numerous benefits they brought to the form, there are several alternative strategies the firm could have adopted. Some of the alternative strategies for The Hyde Piper Company include & #8230;.
Developing a Compelling Strategic Plan:
The first step in a successful and effective IPO value journey is a critical exercise in defining and determining success ("Top 10 IPO Readiness," 2008). The development of a compelling strategic plan for the IPO includes input from the firm's key stakeholders and executives regarding the operational, strategic, and financial initiatives that are required for the firm to go public. In this case, the strategic plan should be long-term i.e. At least 24 months before and after conducting the Initial Public Offering. In this case, the detailed plan shows how the company is prepared to perform in the glare of the public attention before and after going public ("Ready for the IPO Spotlight?" 2011). The compelling business plan provides a clear path for the firm regarding future prospects and direction that may be communicated to stakeholders.
This strategy could have contributed to better results for The Hyde Piper Company because it could have enabled the firm to implement crucial changes at an early stage in order to allow for the changes to season in the company. The compelling plan also contributes to better results because the pre-IPO planning is not mainly centered on the stock issue or narrowly focused. This is because it indicates the expansion capabilities of the private company upon full development and expected operations at the public level. The comprehensive plan is also beneficial because it enables the firm…[continue]
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