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Melissa Gottschall, Jillian Marchand, Scott Duggan, Cary Konopka, Blair MacLaughlin,
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TRX has an impressive investment banking team and support from its majority
shareholder to wait for the right time to issue. They are also in the middle of initiating
new cost cutting objective and getting away from customer care platforms, which provide
little return. With that said, investor demand at a better price might be more achievable if
the firm was to take on some leverage, cash out Hogg Robinson, improve performance
and wait to see if the market becomes less volatile.
4) Summarize IPO process in Canada in two pages (single space)?
The first public equity offering is known as the initial public offering. All initial public
offerings are all cash offers, which entail securities being offered to the general public at
a cash price when the company decides to go public. All companies on the Toronto stock
exchange come under the Ontario securities commissions jurisdiction. Management must
obtain permission from the bod in order to do an IPO. The firm must prepare and
distribute copies of a red herring (preliminary prospectus) to the OSC and to potential
investors.
Theyre a series of steps involved when issuing the initial public offering. The basic
procedure in Canada is as follows:
1. Managements first step before issuing securities to the public is to obtain
approval from the board of directors. This step requires a vote of the
shareholder/shareholders. In this initial phase, the company will create or update
their business plan, select lawyers, auditors and underwriters/agents. As well as
review and strengthen internal systems, procedures, ensure that their accounting
policies and financial records are prepared for the required prospectus. This first
phase is crucial for the business to ensure that they are prepared to follow through
with their IPO objectives.
2. Once issuance of IPO is approved the firm must prepare and distribute copies of a
preliminary prospectus to the OSC and to potential investors. The prospectus
contains:
Description of the offering
Description of the company
Detailed financial information
Management Discussion and Analysis
Detailed information on management, directors and principal shareholders
The OSC will study the preliminary prospectus and notifies the company of any
required changes. The firm must wait for approval from the OSC before
continuing with the IPO.
3. Once approval has been given, underwriters determine the price which the
securities will be sold and the security dealers can begin selling the new issue.
The proceeds from the issue are delivered to the issuing company, and their
securities are then available on the market for exchange
Underwriters are key components of IPO, they perform vital services for corporate
issuers. Initial public offerings with prestigious underwriters will perform better than
those without. The role of the underwriter involves:
1. Formulating the method used to issue the securities
2. Pricing the new securities
3. Selling the new securities
In Canada, many firms establish relationships with their underwriters. There are two
basic types of underwriting possible, regular underwriting and best efforts underwriting.
Determining the correct offering price for the IPO is the most difficult thing an
underwriter must complete.
References:
1. Jordan. B, Roberts. G, Ross. S, & Westerfield W. (2010) Fundamentals of
Corporate Finance, Seventh Edition. McGraw-Hill Ryerson Limite.
2. Gowling Lafleur Henderson, 2013. Guide to Going Public In Canada. Received
from: http://www.google.ca/url?
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