Work brain Corp Case Solution
Workbrain should have to prepare for an IPO because of many factors, it can be said that it is very important for the Workbrain to get listed on the stock exchange in order to expand the business geographically and product wise as well. The listing on the stock exchange is more important for the company operating in the software developing industry; normally the software development companiesâ€™ work is not one-off.
They have to provide regular after sales services to their clients and they have to upgrade the systems regularly in order to maintain the efficiency levels of the software. These factors makes it material for Workbrain to get listed on the stock exchange as it can give reasonable assurance to the clients that the financial position of their vendor is guaranteed. Furthermore, the availability of audited financial statements also enhance the confidence level of the clients as they can assess the financial position of the company more authentically.
Workbrain can obtain maximum amount of finance by listing on the stock exchange, the access to the investors is increased due to listing because large number of individual and institutional investors are available in the stock exchanges. Not only current financing needs will be fulfilled but the future funding requirements will also be accomplished if Workbrain prepare for the IPO. Lastly, the brand awareness will be increased and many of the other companies will know about Workbrain if they get listed on the stock exchange.
Right time for an IPO:
It can be said that this might be the perfect time for the company to get listed on the stock exchange, the future prospects of the company and of the industry are very positive. In order to exploit the opportunities available at that time, it is very important for Workbrain to get prepared in advance. On the other hand, the customers of Workbrain will also get more satisfied if Workbrain is listed on the stock exchange immediately, and it will play an integral part in getting new clients.
The software of Workbrain are of great operational benefit of various organization in almost all parts of the world, it is almost next to impossible that the large multinational or overseas organization give the software development projects to a company which is not even listed on the stock exchange. The immediate listing on stock exchange is also very critical due to the competition in the industry. Almost all the competitors of Workbrain are listed and are multi billion organizations as well such as Microsoft, Oracle and SAP. In order to successfully compete with these giants it is very important for Workbrain to get listed as the customers could be retain due to this.
As opposed to the above-mentioned factors there are many points which are against the immediate listing of Workbrain on the stock exchange. The top management of Workbrain doesnâ€™t have any experience to work in the listed company, if Workbrain is applied for listing immediately, it is possible that the IPO will not be successful due to this lack of experience. In addition to this, the financial performance of Workbrain is also insufficient to make the IPO successful. To get successful IPO it is very important to have revenue of at least $75m p.a.
Which exchange would be beneficial?
It can be argued that NASDAQ would be more beneficial for Workbrain as compared to the effectiveness of TSX. The number of companies listed in the NASDAQ is way more than the companies listed on TSX which gives NASDAQ an advantage over TSX. On the other hand, the number of investors are also very large on NASDAQ as compared to TSX, not only this, the investment levels of these investors are also completely different, the investors of NASDAQ usually invest large sums while the investors of TSX have low level of funds available for investments.
The companies listed on the NASDAQ are very large both in terms of revenues and profits and these companies can also become customers of Workbrain. It would be very beneficial for the Workbrain to acquire these companies as customers both financially and non-financially. In addition, the reputation and brand awareness will be improved and increased if the management decides to be listed on the NASDAQ.
Apart from these favorable factors there are some factors as well which are against the listing on NASDAQ, it would require large amount of revenues and profits to make the IPO successful. Companies which have poor revenues and profits cannot survive on NASDAQ because of the fast and dynamic nature of the stock exchange.
It is recommended that the current shareholder should retain the holdings of the company, although the value of Work brain through free cash flows will give good financial returns if it is sold but it would be more beneficial for the company to hold the shares because of many factors. Firstly, the future financial performance of Work brain is expected to improve because of the ultimate rise in the demand for the software of Work brain. The industry is also expected to be on boom in the next couple of years or after four or five years which can give current shareholders excessive gains on the investment if it is sold at that time……………..
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