Offering shares to the public is known as an initial public offering. An IPO will benefit the
company by allowing the company to raise capital from public investors. However, the
company must meet certain requirements to hold an IPO, such as having consistent
revenue and growth potential, having a strong management team, and a long-term business
plan to name a few (Hall, 2022).
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The main advantage of an IPO is money, and the business will therefore have access to
investment from the investing public. Exposure from an IPO can also increase publicity
and public image, which will support sales and profits (Fernando, 2022). IPOs, however,
can be expensive and ongoing. To reduce risk to investors, the company will also have to
be transparent. Fred’s Miracle Cough Syrup will have to disclose past and current legal
issues, bookkeeping information, and other business data. This includes Jane’s theft from
the company, which could bring into question if the proper checks and balances were in
place within the company, such as the segregating of financial responsibilities. There was
also the issue of the reversed engineered cough syrup recipe that was placed online and the
current claim of sex discrimination.
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While Tammy does not appear to meet the qualifications for an accounting position and
will most likely have to prove that she was qualified, sexual discrimination is not taken
lightly, which may cause a review of the company’s hiring practices. Ted is an
experienced and qualified accountant, and his hiring shows the company is taking the
proper steps toward IPO.
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I would not advise the company to go public right now, and they should focus on resolving
their current legal challenges. This will also allow time for them to demonstrate that they
have learned from the past challenges, have growth potential, and have become a robust
business worthy of IPO.
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References
Fernando, J. (2022, February 8).%Initial public offering (IPO). Investopedia. Retrieved
April 5, 2022, from https://www.investopedia.com/terms/i/ipo.asp%
Kubasek, N., Browne, N. M., Herron, D., Dhoohe, L., & Barkacs, l. (2019).% Dynamic
Business Law (5th%ed.). McGraw Hill.
Hall, M. (2022, February 8).%What "going public" means. Investopedia. Retrieved April 5,
2022, from https://www.investopedia.com/ask/answers/what-does-going-public-
mean/%
