Subject category:
Finance, Accounting and Control
Published by:
INSEAD
Version: 02/2024
Length: 29 pages
Data source: Field research
Abstract
This case provides a unique illustration of how a high-tech European new venture starts-up, grows, burns cash, stumbles, adapts, captures value, disappoints, survives on the verge of bankruptcy to eventually achieve in the fall of 1995 among the most successful IPOs on NASDAQ. On 27 November 1995, L&H received an IPO pricing proposal of H&Q at the low end of the pricing range, after L&H had rejected proposals by Robertson Stephens. The proposal valued the company at USD152 million, when its accumulated deficit was USD(72) million and its shareholder equity USD(37). The case explains the company and its technologies. It then describes the sequence of financing and strategic events that eventually lead to the IPO: early company development, international alliances, several private equity placements, financing on main street and pre-IPO private placement. It provides a lively and timely learning opportunity for an intermediate MBA corporate finance or for a private equity course in three areas: 'guerrilla financing', the why, what and how of an IPO; and IPO valuation. This case was submitted for inclusion in the Indiana University CIBER Case Collection through a CIBER-sponsored case competition.
Teaching and learning
This item is suitable for undergraduate, postgraduate and executive education courses.Time period
The events covered by this case took place in 1987-1996.Geographical setting
Region:
Europe
Country:
Belgium
Featured company
Lernout & Hauspie (L&H)
Industry:
Speech technology
About
Abstract
This case provides a unique illustration of how a high-tech European new venture starts-up, grows, burns cash, stumbles, adapts, captures value, disappoints, survives on the verge of bankruptcy to eventually achieve in the fall of 1995 among the most successful IPOs on NASDAQ. On 27 November 1995, L&H received an IPO pricing proposal of H&Q at the low end of the pricing range, after L&H had rejected proposals by Robertson Stephens. The proposal valued the company at USD152 million, when its accumulated deficit was USD(72) million and its shareholder equity USD(37). The case explains the company and its technologies. It then describes the sequence of financing and strategic events that eventually lead to the IPO: early company development, international alliances, several private equity placements, financing on main street and pre-IPO private placement. It provides a lively and timely learning opportunity for an intermediate MBA corporate finance or for a private equity course in three areas: 'guerrilla financing', the why, what and how of an IPO; and IPO valuation. This case was submitted for inclusion in the Indiana University CIBER Case Collection through a CIBER-sponsored case competition.
Teaching and learning
This item is suitable for undergraduate, postgraduate and executive education courses.Settings
Time period
The events covered by this case took place in 1987-1996.Geographical setting
Region:
Europe
Country:
Belgium
Featured company
Lernout & Hauspie (L&H)
Industry:
Speech technology