After only three years of being in business, Ebay had started the run for its public stock sale, when the stock valuations were at record levels. and so a drop on the Internet Stock mogul (ISDEX) and the S&P500 caused many companies to put their publicly traded future(a) on hold. Later, the market started to recover at the cost of high gear volatilities and the question of whether to go public or not became a big concern for Gary Bengier.
Unlike its competitors and the large majority of internet companies, Ebay had magnificent profits and a distinctive model that guaranteed success. Moreover, If the company indomitable to go for the public offering the signaling effect would be an advantage; EBays willingness to go public despite the markets volatility was a positive signal about how the company perceived the intensity level of its offering.
Before making a finish Bengier analyzed the advantages and disadvantages of going public, Ebays competitors, investors risks when acquire eBay stock and most importantly a fair and entrancing offering price.
1. An initial public offering had both advantages and disadvantages.
In Ebays case, some(prenominal) of the advantages in addition to obtaining capital for corporate maturation and repayment of outstanding debt were: (1) An increase in the companys net charge which would improve the borrowing capability at a trim back cost, (2) unrestricted funds, (3) compensation possibilities for employees and managers, (4) prestige brought by press photo and corporate image enhancement, (5) business opportunities as a top of publicly available financial statements and (6) Liquidity for investors among others. However, there were some disadvantages that put some weight on the difficult decision of whether to issue or wait. Some of them were: (1) The release of Ebays most fast guarded information, (2) The high expenses which include; underwriters discount, filing fees, legal...
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