WORKBRAIN CORP Case Solution & Answer


Alternative 2: Bond Issues

Rather than applying for a bank loan, thecompany can alsoissue bonds for debt financing. As the company isinvolvedin automated advancement, the Industrial Development Revenue Bond (IDRB) program works with nearby government offices to pay for extensive modern tasks.

Alternative 3: Angel Investors:

These financial specialists add to enhancing the hardware capital, advertising systems and industry information base in return for little divides of equity of the objective company.

1.      Discuss whether Workbrain should prepare for an IPO.

By the fall of 2003, people in public securities exchange appeared to be emerging of what had been one of its most noticeably worst periods. After the dotcom and telecom crisisand their consistent issues, the public market was in a roller coaster situation.

As thefirst IPO of thecompany, it showssome riskbutthen again, itwasan indicationof inactiveinvestors by Canadian institutional financial specialists for technology stocks. A large portion of these open business sector entrepreneurs had characterized parts of their portfolios, which were required to be invested into Canadian technology stocks.

The company had more than $10 million cash in hand, due to whichthe question arose as tothat what was the squeezing requirement for an IPO? More cash was dependably an added benefit, howeverthe best decision was to direct another round of endeavor financing. The present speculators did notappear to be in any rush to leave this venture and even showed willingness to contribute more.

A few issues in IPO

As an open company, Workbrain would no longerneed to go into long exchanges with its clients regardingits financialviabilityasthat data would be accessible for everyoneto see. Similarly, the scrutiny joined to being an open company implied that the public tended to see such company as more developed when attempting to bring a million-dollar deal to a close.

2.      Determine if now is the right time for an IPO

To go public or issuing the IPO is a momentous choice for any company. It changes how acompany does its business. The IPO has access to additional, and frequently more profound, sources of capital than a privately owned business. The genuine procedure of going public can be time-consuming and present certain kinds ofissuesfor the company.

Though the public market is deterioratinghowever,the demand of technology sector hasincreased despite the telecom and dotcom crisis. Therefore,for issuing the IPO, it has beenconsidered as the right time for the company to issue the stocks in public.

Along with this, other factors such as: accurate financial forecasting of sales and cost play a key role for the success of the company’s IPO as they show the impact of the company’s valuation and usually leadto high price equity of thecompany’s stock through the stockequity and credit rating of the company.

Secondly, it isvital to consider the group structures, parts and requirements, and lines of reporting in front of IPO. The group that has helped the company the most through its fast development until this stage may need to be changed with a specific end goal in order to lead the company once it becomes public.

Lastly, the realistic valuation of the company that supports the company enters the general public equity advertise, due to which the company’s valuation might get affected by the equity/income products which were traded toopen market peers. The company’s budgetary sponsors and financiers will assess the valuation environment in order to help set the goals. The economic situation at the time of IPO will lead to the comprehending what level of valuation is considered normal, and after that theinitiationas a public company will generate its valuation for the long run. (Farley, 2016)

3.      Determine which exchange would serve the company better (TSX or NASDAQ) and why.

The company has two options in registering the IPO:

The first option is NASDAQ:  the company wanted to register for NASDAQ as the company had low level of incomes and remarkable growth prospects. After all NASDAQ was the major association for innovative organizations and numerous Canadian, European and Asian organizations had gone through the NASDAQ course to show their determination; and it is basically for companies with a lot of capital and the chance of IPO being a success is usually higher…………………

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