Huffman Trucking Case Study

As pointed out previously, Huffman Trucking has experienced tremendous growth over the past few years. Our huge trucking fleet and large number of employees exceed the usual numbers for a privately held trucking company. The growth of our company has become so significant that we must now face the issue of expanding our business. Even though our expansion can be done in many ways, our financial team has narrowed down our expansion options to becoming a publicly shared company (through an IPO), acquiring another organization in the same industry, or merging our business with another organization. Expanding our company in any of the for-mentioned ways can have many advantages for our owners and employees. In order to determine which expansion
“Going public” is an easy way for us to raise cash and will open many financial doors. Our most recent statement of income declares we have an annual net income of $59,167. Even though our income may not appear strong enough for an IPO, qualifications for being listed have changed. Strong financials are no longer necessary. Because our underwriters think an IPO will be a success for us, we can and will be listed.
Let’s consider the strengths and opportunities of going public through an IPO. Even with our current debt, going public will grant us access to capital through selling shares. Our debt-to-equity ratio will improve after going public, making for more promising financing engagements. By becoming a publicly traded company we can offer stock as a bonus, incentive, or part of an employee contract. This will help to ensure the retention of some important employees. We can also use this equity to purchase other
The financial weaknesses of this IPO include the incurring of fees, and will require significant capital on our end. These fees vary from legal, accounting, underwriting, and printing cost. All of which are necessary to create our offering. There are also disclosure weaknesses which are caused by Sarbanes-Oxley compliance; there are costs associated with remaining these compliances. We will have to increase our filing, reporting and disclosure procedures. Our company will also be vulnerable to stock price manipulation. Individuals can manipulate share prices through processes like pump and dump, wash trade and more. Regardless of the weaknesses we would face with an IPO, our stock price would mainly be influenced by the growth of the profits our company