FIN625Case Study:IPO Harvard Case Solution & Analysis

FIN625Case Study:IPO Case Solution

Selection of an IPO

For the underlying project, the company selected for a detailed financial analysis is Spirit AeroSystems Holdings, Inc.The company is basically a Delaware Corporation and it was formed on February 7, 2005 and started trading on New York Stock Exchange with the ticker IDof SPR from November, 2006 with the stock price of $29.15. It can be seen that the company is still traded on the exchange with the current stock price of $43.38.

Since then the historical results showed a quite fluctuating trend in which the first ten years showed a declining trend whereas, from the start of the year 2013, the company’s stock price increased on July 2015 at the price of $56.30. The further financial analysis of the company is done in this report below.

With the help of significant historical efforts, the company has establish edits image's the world’s largest Aero-structures manufacturer and generates significant amount of revenues mainly from its three important segments, which include the fuselage systems, propulsion system and the wing system.

  1. Why would the company go public? Was the time right to do an IPO?

Reasons of Going Public

The company has recently acquired Boeing Division in order to further increase its revenues quickly but in order to finance the acquisition, the company makes use of equity as well as debt including the senior debt. In order for the proper repayment of these types of debt and to manage the low cash position of the company, the management decided to go public on November, 2006 which significantly helped the company to raise enough cash by issuing shares which were used for the repayment of their senior debt.

Due to this reason, this was the most suitable time for the company to go public. Moreover, it can be seen that the company with the help of this strategic move, increased its credibility among the financial institution which could help in raising more funds for the research and development cost. The company’s liquidity position increased significantly which helped in meeting the working capital requirements of the company.

Market Opportunities

With the acquisition of Boeing, the company significantly increased its opportunities to enhance its sales growth because of the company’s strong brand image and customer loyalty towards the product. The company is constantly finding ways to reduce its cost which has significantly helped the company in increasing its revenues and it is expected to have more such exciting opportunities in the future that could increase productivity of the company. Furthermore, it can be seen that the company does have the merger and acquisition opportunities in the market which could enhance its performance.

Industry Environment

The product in which the company is dealing is facing significant competition which requires the company to move very carefully or in the other case, could suffer significant losses. The major competitors of the company include the Kawasaki Precision Machinery (U.S.A.), Inc.Alenia Aeronautica, Mitsubishi Electric Corporation, Fuji Aerospace Technology Co., Ltd., GKN Aerospace, The Goodrich Corporation, Saab AB, Snecma, Triumph Group, Inc. and Vought Aircraft Industries...................

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