Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 08.1996
Length: 11 pages
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Abstract
This case and its companion (UVA-F-1095) provide comprehensive coverage of a firm''s decision to undertake an initial public offering (IPO). The company is a nonregulated financial firm in a rapidly growing area of consumer finance (high-credit automobile loans). The A case follows the firm from its first meeting with the investment bankers to the determination of a preliminary IPO price range. In the B case, the firm''s ''road show'' encounters a ''cold issue'' market and Eagle is unable to sell its shares at a price near the preliminary file range. Management is confronted with a tough choice- whether to proceed with the IPO offer or cancel it. The cases provide a rich opportunity to compare management''s internal valuation of the firm (derived from market multiples and discounted-cash-flow analysis) with the market''s assessment of value.
About
Abstract
This case and its companion (UVA-F-1095) provide comprehensive coverage of a firm''s decision to undertake an initial public offering (IPO). The company is a nonregulated financial firm in a rapidly growing area of consumer finance (high-credit automobile loans). The A case follows the firm from its first meeting with the investment bankers to the determination of a preliminary IPO price range. In the B case, the firm''s ''road show'' encounters a ''cold issue'' market and Eagle is unable to sell its shares at a price near the preliminary file range. Management is confronted with a tough choice- whether to proceed with the IPO offer or cancel it. The cases provide a rich opportunity to compare management''s internal valuation of the firm (derived from market multiples and discounted-cash-flow analysis) with the market''s assessment of value.