Session 14: February 21, 2008

Initial Public Offering (IPO)

Quote of the Day

"Failure is never final and success is never ending. Success is a journey, not a destination." ~ Robert Shuller

Summary

What is an IPO? In this case study and lecture session we will look at a particular stage in the growth of an explosive venture: the decision to go public. While an initial public offering (IPO) has been widely heralded by the media as the seminal event in the start-up process, there is more to the story than champagne celebrations and new-found riches. An IPO has dramatic effects on the company and the founders; in this case we will look more closely at the whole story of an IPO.

Required Readings (Policy on Required Readings.)

• Readings from the Textbooks:
• Technology Ventures (Dorf and Byers): Review 18.11 Initial Public Offerings
• Case:
• BioTransplant Incl.: Initial Public Offering (in course reader)
• Stocks and IPOs - From the Investor FAQ.
• Articles to read:
  • A New Wariness as the Risks Shift in Biotech Investing (NYT Dec. 30, 2005)
• Watch the following short video clips:
• Karen Richardson (E.piphany) - To Stay Private or Go Public
• Karen Richardson (E.piphany) - Public vs. Private Pros and Cons
• Frank Levinson (Finisar) - How does going public change you and your company?

Study Questions (Policy on Study Questions.)

1. What is an "IPO"? How does it differ from other ways of funding a company?
2. What are the key events prerequisite to an IPO? Why is the process for selling shares to the public so heavily regulated?
3. How does an IPO impact the founders? The management? The private investors? How does running the company change following an IPO?
4. What are the pros and cons of an IPO? What are BioTransplant's alternatives?

Team Case Analysis (Policy on Case Analyses.)

• Is BioTransplant ready to become a public company? What makes it a strong candidate and what factors suggest that it will not perform well as a public company. If you were Elliot Lebowitz, would you go public now?

 

OAP Assignment (Policy on Online Assignments.)

See OAP project page.

 

Recommended Readings (Policy on Recommended Readings. List of readings)