quilt chapeter 2 Flashcards
Charles’s Lego Business: Why might you choose one form of ownership over another?
Why do mergers and acquisitions occur?
to expand a company’s reach or gain market share in attempt to create shareholder value
What are some characteristics of a Public Corporation?
(1) Is listed on a public exchange: Shares of ownership can be equally be bought and sold
(2) Has public reporting options: Because they sold securities in a public offering such as an IPO or allowed their investor base to reach a certain size
What are some downsides to being a Public Corporation?
(1) Disclosure Burden: Must share information to the public
(2) Scrutiny by investors and the public
(3) Short-term focus
What is an IPO?
Initial Public Offering: A private company creates new shares which are underwritten by a financial organization and sold to the public.
IPOS are first sale of a company’s shares to the public and the listing of shares in a stock exchange which allows them to raise capital.
What is an SPAC?
Special Purpose Acquisition Company: A separate company with no operations is created strictly to raise capital to acquire the company going public. SPACs are the fastest method of going public, and have become popular in recent years.
What is a Direct Listing?
A private company enters a market with only existing, outstanding shares being traded and no new shares created. The cost is lower than that of an IPO, since no fees need to be paid for underwriting.
What are some characteristics of a Private Company?
(1) stock held by limited amount of stockholders,
(2) less pressure, &
(3) less money
Is being a public company always the end goal?
Going public increases prestige and helps a company raise capital to invest in future operations, expansion, or acquisitions. However, going public diversifies ownership, imposes restrictions on management, and opens the company up to regulatory constraints. Therefore companies do not have an end goal, the people inside the companies have many varying goals determined by their personal needs and incentives.
Delaware
Many companies (66% of Fortune 500) incorporate in ___ due to business-friendly courts/laws.
idk
What are the characteristics of a small business?
(1) work for yourself
(2) generate steady income in the long-term
Ways to “Go Public”
(1) Initial Public Offering (IPO): The first sale of a company’s shares to the public and the listing of shares in a stock exchange.*
(2) Special Purpose Acquisition Company (SPAC): Aseparate company used strictly to raise capital with no operations
(3) Direct Listing: A private company enters market with only existing shares; no new share created
