Ktm Case Report Essay

2990 Words Aug 21st, 2011 12 Pages
The purpose of this report is to determine the optimal course of action for KTM in order to pay BC European Capital, and to position our company for future growth and profitability.

Background. In 2003, BC European Capital, a venture capitalist firm owning 49% of KTM, expressed its intention to exit its investment in KTM by September of 2006. KTM’s net profit nearly quadrupled in 2002. It appears this growth will continue in 2003, though likely at a much slower rate. KTM has a 13.0% share in the stagnant European off-road market, and an 8.5% market share in the burgeoning United States off-road market.

Scope. We have investigated several possible solutions for KTM: (1) an initial public stock offering; (2) a
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Though our company grew under BCE, we were ultimately left in a position where we were scrambling financially to pay off what we owe. By getting another venture capital firm, we may find ourselves in the same position five years from now. For true financial improvements, it makes sense for our growth strategy to be completely in the hands of our management.

Initial Public Offerings
Though the financials are in place to attract investors, KTM will need to carefully navigate the IPO process in order to successfully use it as a means of paying BCE, and ensuring growth in the future. The first step for management will be to assemble a team that can create a plan for taking the public company, as well as execute that plan. Of course our executives will play a role in communicating our vision for the company among all levels of employees, as well as continue to oversee the day-to-day operations of KTM. In addition, we must consider hiring outside accountants, lawyers, and outside financial analysts; they will provide us with an objective look at our company’s position and a subjective opinion on what steps are necessary for a successful IPO.

This team’s first priority will be research the legal process of doing an initial public offering in Austria (as well as any countries that we hope to attract investors from). Our company must go through the proper government channels in order to ensure that we are able to complete the

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