Rosetta Stone Essay

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o Points to Consider: 1. Proceeds from public Shares: ➢ The most common reason CFOs choose to provide an IPO on their firm is to create public shares for use in future acquisitions. While “Rosetta Stone (‘RS’)” may not have immediate acquisition plans, the public offering of their shares will provide new capital for them to continue to expand. ➢ Only 5% of their revenue comes from outside of the United States, and with increased capital from an IPO, RS can look to pursue new markets. Whether they plan to increase their market share through internal investment or acquisitions of competitors, the increase in available capital is a huge advantage for a firm with such an aggressive growth strategy in mind. ➢ Conversely, many companies chose an IPO as a first step when trying to create a fair price if they were to be taken over. There is the threat of major companies with deep pockets, such as Apple and Microsoft, entering the language software business and this IPO will help establish a market for the potential acquisition of their brand. 2. Cashing Out: ➢ Another reason firms choose to go public is that it allows their investors and current shareholders to cash out. Private equity firms ABS Capital Partners and Norwest Equity Partners, who supplied a great deal of capital in order to allow for expansion in 2006, are in position to profit a great deal on their investment if Rosetta Stone goes public. ➢ Insiders with this strategy tend to be very opportunistic; seeking a time to go public when they believe the company’s overall value is at its highest. ➢ However, this reason alone is seldom the sole deciding factor amongst CFOs when determining whether to go public or not, allowing venture capitalists or PE’s to cash out is important in their IPO decision making process 3. Improving Image: ➢ Half of CFOs surveyed stated that allowing

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