Advanced Corporate Finance Case 29

1394 Words6 Pages
Introduction: TRX is a midsize technology company serving the travel and finicnial services industries. Most of TRX’s transaction processing and data-integration business is behind the scenes, which makes things more complicated to investors understanding of what the company does. It also complicates how to benchmark the company against other market comparables. Although the company has had strong revenue growth they have not experience a profit. TRX represents a smaller lesser known company that faces significant challenges in becoming known and attractive to investors. The case looks at the company from its incorporation in 1999 through the IPO decision in 2005. In addition to raising capital the case includes consideration of another motivation for going public. When the company was incorporated in 1999 they had attempted to go public but this attempt failed because of the dot com collapse. Because of the failed IPO TRX’s president and CEO Trip Davis found strategic investors to raise $20 million in a note convertible into equity at $11 per share. Davis had hoped to reach certain synergies with these business partners but they just never worked out. The IPO was done in order to raise capital and to allow some of its investors a way out of the firm. It is currently difficult to gauge investor’s interest in technology IPOs. TRX’s road show produces some bad news for the IPO. It appears that there is not enough interest in the preliminary file range of $11 to $13 per share. Based on the demand it would appear as though the price needs to be lowered to at least $9 per share. If the price is not lowered to $9 they will most likely not meat this offering. However, the strategic investors bought the shares at $11 per share. Therefore Davis feels as if they will not be satisfied with accepting less than what their original investment was. Therefore

More about Advanced Corporate Finance Case 29

Open Document