By 1969, Wal-Mart\'s founder Sam Walton had vreated a chain of Wal-Mart stores.
ID: 2772657 • Letter: B
Question
By 1969, Wal-Mart's founder Sam Walton had vreated a chain of Wal-Mart stores. The company's annual sales were around $31 million. To reach this point, the company had taken on a lot of debt. Walkton realized that if he wanted the company to grow further, it would need to raise funds and pay off its debt. Thus Sam Walton and his son, S. Robson Walton, decided to raise money by selling their stock to the public.
In 1970, they raised $4.5 million through an IPO. Arkansas-based Stephens Inc. and Boston-based White Weild handled the IPO. As the company grew, the Waltons set up Walton Enterprises, which owns shares of the company.
1. Identify one of the underwriters in the IPO deal that described above
a) Walton Enterprises
b) White Weld
2) Underwriters sell IPO shares only to their institutional clients. True or False?
Explanation / Answer
Solution.
1. b) White Weld one of the underwriters in the IPO deal that described above
2. False.
Initial public offering (IPO) or stock market launch is a type of public offering in which shares of stock in a company usually are sold to institutional investors. that in turn, sell to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company. Initial public offerings are mostly used by companies to raise the expansion of capital, possibly to monetize the investments of early private investors, and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although IPO offers many advantages, there are also significant disadvantages, chief among these are the costs associated with the process and the requirement to disclose certain information that could prove helpful to competitors. The IPO process is colloquially known as going public.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.