IPO Case Questions
Why does a company go public?
What are the required disclosures for going public?
What are the advantages of going public? The disadvantages?
What are the fees associated with going public?
What is an IPO syndicate? Why are they used?
What are the specific reasons that your company went public?
Do you agree with your company’s choice to go public? If so, how about the timing of the IPO?
What has happened to your company since it has gone public?
i.e. short term, long term
What would be different if your company went public today?
Valuation Process (most important part of the assignment)
Build a full dynamic, integrated model with sensitivity analysis.
Justify your choice of model and key assumptions
Do you feel that the IPO price was the proper price for your company’s shares?
To fully answer this question, work through a fully dynamic spreadsheet that incorporate a mix of absolute and/or relative valuation methods to arrive at a fair value for the stock. Some information that you are accustomed to having for prior valuation work (i.e. historical stock prices to find your company’s beta relative to an index) will not be available, so you will have to improvise and find alternative ways of finding proxies for important elements.
Be sure to correctly label and identify all assumptions and inputs utilized for the calculations and be comfortable in explaining why those are the case.
Great analyses will not only entail one scenario but account for a range of possibilities, such as a bear, expected and bull case to help suggest potential upside or downside relating to the potential investment.