Riordan Manufacturing
Riordan Manufacturing
FIN 370
February 2013
University of Phoenix
Riordan Manufacturing
Riordan Manufacturing is a global manufacturer with projected annual earnings of $46 million. The parent company Riordan Industries Incorporated is a Fortune 1000 enterprise. The company specializes in manufacturing plastic beverage containers, custom plastic parts, and plastic fan parts. Manufacturers from the automotive, aircraft, appliance, as well beverage makers and bottlers are major customers. The Department of Defense is also a significant customer. Continuous growth is important to Riordan. In 2000, the company expanded its operations in China. The corporation now wants to consider other expansion options. This paper will evaluate the following expansion options: Going public through an IPO, acquiring or merging with another organization.
Going Public through an IPO
An Initial Public Offering (IPO) is the first time a company issues stock to the public. According to Bateman and Snell, “Initial public stock offerings (IPOs) offer a way to raise capital through federally registered and underwritten sales of shares in the company” (2011, pg. 255). There are various advantages to going public. An IPO may raise capital, reduce debt, improve the balance sheet, and enhance net worth. Riordan may be able to pursue unaffordable opportunities and improve credibility with customers. Investors may be attracted to the company now.
The disadvantages include the expense, time, and effort involved. Riordan’s finance and accounting department does not have a consistent method for maintaining corporate data files. Recordkeeping between each division is not seamless. When going public corporate governance and internal controls are significantly audited under the Sarbanes-Oxley Act. The Securities and Exchange Commission (SEC) requires financial statements be prepared using the Generally Accepted Accounting Principles. Implementing these changes is expensive. The company may
FIN 370
February 2013
University of Phoenix
Riordan Manufacturing
Riordan Manufacturing is a global manufacturer with projected annual earnings of $46 million. The parent company Riordan Industries Incorporated is a Fortune 1000 enterprise. The company specializes in manufacturing plastic beverage containers, custom plastic parts, and plastic fan parts. Manufacturers from the automotive, aircraft, appliance, as well beverage makers and bottlers are major customers. The Department of Defense is also a significant customer. Continuous growth is important to Riordan. In 2000, the company expanded its operations in China. The corporation now wants to consider other expansion options. This paper will evaluate the following expansion options: Going public through an IPO, acquiring or merging with another organization.
Going Public through an IPO
An Initial Public Offering (IPO) is the first time a company issues stock to the public. According to Bateman and Snell, “Initial public stock offerings (IPOs) offer a way to raise capital through federally registered and underwritten sales of shares in the company” (2011, pg. 255). There are various advantages to going public. An IPO may raise capital, reduce debt, improve the balance sheet, and enhance net worth. Riordan may be able to pursue unaffordable opportunities and improve credibility with customers. Investors may be attracted to the company now.
The disadvantages include the expense, time, and effort involved. Riordan’s finance and accounting department does not have a consistent method for maintaining corporate data files. Recordkeeping between each division is not seamless. When going public corporate governance and internal controls are significantly audited under the Sarbanes-Oxley Act. The Securities and Exchange Commission (SEC) requires financial statements be prepared using the Generally Accepted Accounting Principles. Implementing these changes is expensive. The company may
References: Bateman, T. S., & Snell, S. A. (2011). Management: Leading & collaborating in a competitive world (9th ed.). New York, NY: McGraw-Hill Irwin. Doidge, C., Karolyi, G. A., & Stulz, R. M. (2011, August 3). The US left Behind: The rise of IPO activity around the world. Retrieved from http://www.voxeu.org/article/us-left-behind-rise-ipo-activity-around-world Ernst & Young. (2013). Secrets of successful IPOs. Retrieved from http://www.ey.com/GL/en/Services/Strategic-Growth-Markets/Ernst---Youngs-guide-to-going-public---IPO-readiness--going-public-and-winning