Huffman Trucking Organization Strategy Paper 1

Huffman Trucking Organization Strategy Paper Team Members FIN/370 Date Instructor Name

Huffman Trucking Organization Strategy Paper 2 Huffman Trucking Organization Strategy Paper T e many rea!on! firm! !eek an initia" pu#"ic offering$ ac%ui!ition or merger inc"u&e$ '#etter acce!! to capita"$ en ance& "i%ui&ity of ! are!$ &i(er!ification of o)ner! ip$ an&$ fina""y$ increa!e& pu#"icity* +Ho(akimian , Hutton$ 2010-. /ecent ana"y!i! a! e(en !tate& t at initia" pu#"ic offering! an& merger! an& ac%ui!ition! are inter&epen&ent. Ho(akimian , Hutton !ugge!t t at$ 'an IPO may #e a mec ani!m for o#taining currency +i.e.$ pu#"ic"y tra&e& !tock- for !u#!e%uent merger acti(ity* +Ho(akimian , Hutton$ 2010-. Initial Public Offering (IPO) Participating in an initia" pu#"ic offering +IPO- i! a proce!! ) ere t e #u!ine!! i! offere& to t e pu#"ic #y !e""ing !tock of a company a"!o kno)n a! taking a #u!ine!! pu#"ic. T e!e !tock! repre!ent a partia" o)ner! ip in t e company to t e in&i(i&ua"! or in&i(i&ua" t at purc a!e! t e !tock. Ho)e(er$ t ere )i"" #e &i!a&(antage! an& a&(antage! ) en a #u!ine!! &eci&e! to offer !tock to t e pu#"ic$ !uc a! !tronger capita" #a!e an& ! ort term gro)t pre!!ure. 0not er i! increa!ing ot er financia" pro!pect!$ &i!c"o!ure!$ an& confi&entia"ity. In a&&ition$ Huffman Trucking may #ecome #etter !ituate& for making ac%ui!ition! #y enforcing o)ner &i(er!ification$ re!triction! on management$ e1ecuti(e compen!ation$ "o!! of per!ona" #enefit! an& increa!e& company an& per!ona" tra&ing re!triction!. For Huffman Trucking to e1pan& t eir market ! are of t e in&u!try a&&itiona" capita" i! re%uire&. 0n Initia" Pu#"ic Offering +IPO- i! one option to ac%uiring t e re%uire& capita". Huffman Trucking mu!t )eig t e Strengt !$ 2eakne!!e!$ Opportunitie!$ an& T reat! of t i! option to come to a proper conc"u!ion on it! (ia#i"ity.

Huffman Trucking Organization Strategy Paper 3 One a&(antage of going pu#"ic )it IPO i! t e pu#"ic (i!i#i"ity t e company ac%uire! from t e marketp"ace$ ) ic can "ea& to ne) cu!tomer!. T i! option a"!o )i"" make future capita" ac%ui!ition #y !e""ing a&&itiona" !tock! an& #on&! fa!ter an& ea!ier. IPO a"!o offer! more !ecurity to in(e!tor! )it !tronger regu"ation!. T e !tronger regu"ation! re%uire& for pu#"ic"y tra&e& companie! put in(e!tor! more at ea!e +3.S. Security 41c ange 5ommi!!ion$ 2002-. Ho)e(er$ t e !tronger regu"ation! create more co!t! for a&&itiona" management an& accounting practice!. Proper un&er!tan&ing of t e a&&itiona" re%uirement! of t e Sar#ane! O1"ey an& t e a&&itiona" co!t! a!!ociate& )it proper"y fo""o)ing t e ne) ru"e! an& regu"ation! are a !trong factor in making t e &eci!ion to procee& )it t e IPO option. Acquisition T e ac%ui!ition of anot er company )it in t e !ame in&u!try i! an option for e1pan&ing operation!. T ere are many factor! a!!ociate& )it ac%ui!ition!$ !uc a! t e &e!ire& company6! 2eig te& 0(erage 5o!t of 5apita" +2055-. T e 2055 of t e &e!ire& company e"p! &etermine t e !tan&7a"one company6! (a"ue +Titman$ 8eo)n$ , 9artin$ 2011-. Once t e (a"uation of t e &e!ire& company i! kno)n t e e1ecuti(e! can make a more e&ucate& &eci!ion on t e ac%ui!ition. T e ac%ui!ition of anot er company in t e in&u!try #ring! a&&itiona" cu!tomer !aturation a! )e"" a! geograp ic "ocation!. T e a&&itiona" emp"oyee! an& e%uipment are a"rea&y in p"ace an& if &one proper"y on"y re%uire minima" merging )it in t e ne) organization. T i! a"" e"p! company gro)t reac ing a ne) cu!tomer #a!e an& a "arger piece of t e in&u!try. T e regu"atory

Huffman Trucking Organization Strategy Paper : re!triction! for an ac%ui!ition are "e!! cum#er!ome t an t e a&&itiona" regu"ation! of pur!uing t e IPO. Some )eakne!!e! an& t reat! to an ac%ui!ition are t e e1i!ting emp"oyee! an& management. 0 cu"ture c"a! can cau!e !e(ere in&rance! in !ucce!!. T e cu"ture of t e can&i&ate company mu!t mirror a! c"o!e"y a! po!!i#"e )it Huffman Trucking. T e a&&ition of t e a"rea&y e1i!ting infra!tructure )i"" take !ome time to merge )it t e company (a"ue! an& &irection. T ere are a"!o a&&itiona" co!t! a!!ociate& )it re#ran&ing an& "a#e"ing t e ne)"y ac%uire& a!!et!. T e ac%ui!ition a"!o may &ep"ete e1i!ting capita" !urp"u! for a ! ort time. Merging with another Organization Ho(akimian , Hutton con&ucte& an ana"y!i!$ ') ic fin&! t at t e ac%ui!ition acti(ity of ne)"y pu#"ic firm! contri#ute! to firm gro)t more !o t an in(e!tment in re!earc an& &e(e"opment +/,;- an& capita" e1pen&iture!. 0t t e aggregate "e(e"$ t i! re"ation! ip #et)een IPO! an& !u#!e%uent merger! tran!"ate! into a "inkage #et)een IPO an& merger )a(e!. 0 200< !tu&y foun& t at )a(e! of IPO acti(ity prece&e merger )a(e!* +Ho(akimian , Hutton$ 2010-. 2 en )e ear t at a company )ant! to merge )it anot er$ )e automatica""y a!!ume t at t ey are in &e#t an& nee& financia" e"p to remain in #u!ine!!. Ho)e(er$ t i! may not #e t e ca!e )it a"" merger!. Some companie!$ "ike Huffman Trucking$ ) o per ap! i! &oing )e"" a! a !ma""er #u!ine!!$ may )ant to e1pan& an& gro). T e i&ea of e1pan&ing or gro)ing !oun&! goo&$ #ut Hoffman Trucking )ou"& #e #etter if t ey )ou"& remain a !ma""er #u!ine!! an& fin& ne) "ocation! in!tea& of a ne) partner to merge )it #ecau!e t e con! out)eig t e pro!. For e1amp"e$ if Huffman Trucking merge& )it anot er company an o#=ecti(e )ou"& !u#!e%uent market gro)t an& ne) c"ient!. T i! may !eem goo& #ut t en t e company )i"" nee&

Huffman Trucking Organization Strategy Paper > to re!tructure it! organizationa" ro"e! an& =o# &e!cription!. T i! cou"& u"timate"y mean =o# cut! or #enefit! "o!!e! for emp"oyee!? #ot c"ear"y con!. Se(era" ne) t eorie! a(e emerge& t at companie! can ma1imize t e #enefit! of an ac%ui!ition t roug an initia" pu#"ic offering. Ho(akimian , Hutton !tate$ @an IPO faci"itate! ac%ui!ition! #y re"a1ing financing con!traint! t at may impe&e a pri(ate firm6! a#i"ity to ac%uire attracti(e target!. T i! can appen in a num#er of )ay!. Fir!t$ a pu#"ic i!!ue of !tock &uring an IPO it!e"f generate! fun&ing for future ca! 7#a!e& merger!. Secon&$ t e IPO pro(i&e! a firm )it acce!! to t e pu#"ic e%uity market an& en ance! it! a#i"ity to acce!! t e pu#"ic &e#t market$ ) ic can #e u!e& to rai!e fun&! for future ac%ui!ition!. Fina""y$ pu#"ic"y tra&e& !tock can #e &irect"y u!e& a! a met o& of payment in !tock7#a!e& ac%ui!ition!* +Ho(akimian , Hutton$ 2010-. E change !ates 41c ange rate! f"uctuate continuou!"y$ an& it i! t i! rea!on t at t ey are a key factor in company6! !ucce!! on an internationa" !tage. T e nature of t e )or"&)i&e currency market! +) ic are continuou!"y c anging- mean! t at pre&icting t e future i! a"mo!t impo!!i#"e. Fai"ure #y Hufmann Trucking to proper"y manage an& un&er!tan& t e!e rate! can "ea& to co!t"y e1c ange rate!$ an& "o!! of re(enue. T e main ri!k$ a! =u!t inte& )it e1c ange! rate!$ i! t at t ere are numerou! factor! t at p"ay into t e e1c ange rate!. T e!e (ary from po"itica" i!!ue!$ co!t of oi"$ an& economic factor!. T e #e!t )ay Huffman Trucking can protect t eir !take in e1c ange rate! i! #y u!ing a For)ar& 5ontract. 0 For)ar& 5ontract i! a ri!k management too" t at can e"p Huffman Trucking manage t eir currency re%uirement!. 0 For)ar& 5ontract a""o)! you to agree an e1c ange rate to&ay to #uy or !e"" currency at a &ate in t e future. Huffman Trucking$ on

Huffman Trucking Organization Strategy Paper A agreeing to a For)ar& 5ontract )ou"& make a re%uire& >B &epo!it +10B i! more t an A mont ! for)ar&-. T e C>B #a"ance i! paya#"e #efore t e contract &ate a""o)ing Huffman Trucking6! fun&! to #e "e(erage& e"!e) ere. If t e a&(antage i! proper"y u!e&$ Huffman Trucking can en=oy t e #enefit! of increa!ing t eir re(enue #y e1pan&ing internationa""y. "onclusion T ere are numerou! action! a company can take to increa!e capita"$ gro) t eir market #a!e$ an& increa!e re(enue. In a&&ition to "ooking at internationa" e1pan!ion an& "e(eraging e1c ange! rate! to ma1imize profita#i"ity$ t ere are option! to rai!e capita" on t e primary an& !econ&ary market!. 5ompanie!$ "ike Huffman Trucking$ )i"" ana"yze t eir !trategic o#=ecti(e!$ current financia" !ituation an& t e !u#!e%uent pro! an& con! of going pu#"ic$ a merger )it anot er company$ or an ac%ui!ition #y anot er company$ to e"p &etermine t e #e!t cour!e of action.

Huffman Trucking Organization Strategy Paper 7 /eference! 0po""o Droup$ Inc. +200A-. Eirtua" Organization Huffman Trucking Hi!tory. /etrie(e& on No(em#er 30$ 2013 from ttp!F//ecampu!.p oeni1.e&u/!ecure/aap&/ci!t/(op/Gu!ine!!/Huffman/internet/in&e1.a!p 0u!ig t Pu#"i! ing. +200C- /e&uce /i!k to 5urrency F"uctuation an& 41c ange /ate. /etrie(e& fromF ttpF//))).au!ig t.com.au/re!ource!/artic"eHre&uceFIri!k!. tm Ho(akimian$ 0.$ , Hutton$ I. +2010-. 9erger79oti(ate& IPO!. Financia" 9anagement$ 3C+:-$ 1>:771>73. Titman$ S.$ 8eo)n$ 0. J.$ , 9artin$ J. ;. +2011-. Financia" 9anagementF Princip"e! an& app"ication! +11t e&.-. 3pper Sa&&"e /i(er$ NJF Pear!on/Prentice Ha"". 3.S. Security an& 41c ange 5ommi!!ion. +2002-. Sar#ane!7O1"ey 0ct of 2002. /etrie(e& on No(em#er 30$ 2013 from ttpF//))).!ec.go(/a#out/"a)!/!oa2002.p&f