Trx Ipo Essay

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TRX Initial Public Offering Case FIN 4385 Kelly Deeds Kevin Pope Drew Williams Eric Lundberg Summary of TRX IPO Recommendation • Attributes of a good IPO candidate (p.3) • Comparing TRX on these attributes(p.3-4) • Analysis of the current market climate(p.4-5) • Effects of minority shareholders on the IPO(p.5-6) • Explanation of the residual income model(p.6-8) • Estimated file range for TRX’s shares(p.8) • Our recommendation(p.8) Several factors make a company a good candidate for an IPO. First, the company should have a solid history. Since IPO’s are risky for investors, they will want to have as much financial data on the company as possible. Second, the company should have a good business model. A good business plan will allow the company to deal with adverse market conditions and allow the potential investors to see where the company is headed in the future. Third, the company should also be experiencing high growth. Investors will expect the company to have long term sustainability since most investors will be looking to hold the stock long term. Fourth, the company should be in a stable industry that is on the rise and not in an industry that is becoming obsolete. TRX seems to be a mixed candidate for an IPO with both good and bad aspects. Some of the aspects that make TRX a good candidate for an IPO are that they have been an independent corporation for 6 years. Although this is not a very long history, you must keep in mind that TRX was spun off another company, WTP, which is the third largest travel agency. They have experienced an average revenue growth rate of 18.57% over the past 5 years. Their business plan is very solid. As a behind the scenes travel processing service company, TRX looks to benefit greatly from the recent trend of

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