Essay on Trx Finance Case

1632 Words Nov 16th, 2015 7 Pages
TRX Inc. (Home Assignment). The Financial Analysts

Melissa Gottschall, Jillian Marchand, Scott Duggan, Cary Konopka, Blair MacLaughlin, Jake Baker

1) In general, what attributes make a company a good candidate for an IPO?
- Good Business History and Background: Investors will forecast future earnings off of the historical background of the company. It will also show that your company is stable. Many investors will be looking to hold the stock long-term, so if investors trust the background of the company, more people will be willing to invest.
- Experienced Management: Good management can ensure that the company will make decisions that are best for the company and to ensure profitability. Also, good management is the basis
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- Growing Industry: TRX is an internet-based company. With the majority of business transactions being online, this industry has been steadily increasing. - Growing Company: From 2000-2005 the company has steady growth. 3) How favorable is the market climate for the TRX IPO? TRX operates in a very volatile market where prices for IPO’s go up and down quite often in short periods of time. This choppy market makes it hard to initiate an IPO at the right time. Although market returns and performance have been better than they were in 2004, the current market for the industry is soft and as always, competition is fierce, making the supply for funds greater than the investor demand. This is the main factor that’s preventing TRX from having much control over the issue price, especially the $11-$13 per share. Also, since the market returns are currently down in the travel industry, investors could be concerned about their investment, even at the $9 issue price.

TRX has an impressive investment banking team and support from it’s majority shareholder to wait for the right time to issue. They are also in the middle of initiating new cost cutting objective and getting away from customer care platforms, which provide little return. With that said, investor demand at a better price might be more achievable if the firm was to take on some leverage, cash out Hogg Robinson, improve performance and wait to see if the market becomes less volatile. 4) Summarize IPO

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