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The focus of this paper is to examine and research the financing issues that an organization must face when going public. as the organization which has had an initial public offering in the last three years.The learning team will address registration, disclosure, and compliance issues and cost of issuance.
Clearly, an IPO of a company such a Twitter, which has substantial private assets, would create a large splash in the worldwide markets.
Although the company may not be in critical need of financing for its short-term projects, an IPO would dramatically increase the market share of the company relative to its competitors.
In the traditional IPO, an investment bank underwrites the issuance of shares to the public by determining the price and amount of shares to be dealt.
The underwriter then shops the shares around to wealthy institutional investors; based on their reception, the underwriter will allocate shares and collect a percentage of the IPO.
Although the risk factors are in place, Chipotle's financial data provides more assurance of returned profit on investment.
In their "Rapidly Improving Financial Performance" section of the SEC filing they state a 130% increase in revenue in 2004 of 470.7 million up from 2002 and 49% up from 2003.
Include the following: • The role of the investment banker and underwriter • The role of an originating house and a syndicate • An explanation of the pricing of the issue • A discussion of some of the risks involved in the public offering and how the securities laws deal with them • A discussion of any foreign exchange risks the company can face with your ideas about how to mitigate them Support your work with at least one scholarly reference besides the textbooks.
Underwriting firms assist the issuer in the IPO process by determining what type of security to sell to the public, how much to sell, and at what price to sell.
Through there prospectus statement Chipotle makes it clear that they are set apart from other chains by serving "Food with Integrity".
However, there are risks involved in investing, they are as follows: the number of new stores rapidly being established, lack of independent operating history, ability to continue to grow and profit, and health and safety concerns regarding the ingredients used among others.