Facebook’s Initial Public Offering

The reasons for Facebook to go habitualIn the beginning, Facebook, through its founder Mark Zuckerberg, was unwilling to go public and refused a number of buyout offers. However, it reached the 500 wand after accepting private investments from firms, which eventually made Zuckerberg decide to go public. The Securities and Exchange Commission (SEC) requires that private companies reaching more than 500 shareholders of record must(prenominal) abide by the same requirements of financial disclosure undertaken by public companies (Sloan, 2012).It is clear that Facebooks decision to go public through an initial public offering ( initial public offering) was not the same as the common reasons of firms when they undertake the same decision, which is to draw more revenues (Palmiter, 2008). However, in the long run, Facebook also aimed to access external financial support as a result of IPO (Sloan, 2012).The reasons for companies to go public beyond their need for more money are enhanced f inancial condition, ability to gold out, changed corporate reputation, and improved opportunity for future acquisition (Peng, 2012).The dollar objective of every friendship in relation to the amount expected to be raised via IPOThe dollar objectives of companies entering IPOs for increased revenue purposes are to develop reserves and increase external funds (Vedavalli, 2007 Sullivan, 2007), access capital (Dana, 2004 Ernst and Hacker, 2012), improve financial condition, increase shareholder value, and improve capital to sustain growth (Ernst and Hacker, 2012).In Facebooks case, its stock price dwindled as there were concerns about its overprice IPO and long-term business outlook and lost around $ 25 billion in value (Kuratko, 2012).The expected use of the money raised by IPOOne expected use of the money raised by IPO is retiring from debt, in which, it is necessary to pay close attention to the companys financial data and overall growth prospects. Another is enjoyment of the proc eeds by the owners of the shares, especially for the sale of secondary shares. Moreover, sold primary shares (newly created shares) from an IPO increase revenue to the companies accounts (Khurshed, 2011).In the case of Facebook, the company raised a large amount of money, which has amounted to $ 18 billion. In actuality, there was no increase in the number of shares it sold to the public instead, most of the new shares were from Zuckerberg, and such was considered not a good sign (Khurshed, 2011).ReferencesDana, L. (2004) Handbook of research on international entrepreneurship. Glos, UK Edward Elgar publication Ltd.Ernst, D. and Hacker, J. (2012). Applied international corporate finance. Berlin Verlag Franz Vahlen GmbH.Khurshed, A. (2011). Initial public offerings The mechanics and performance of IPOs. First Edition. Hampshire Harriman House Ltd.Kuratko, D. F. (2012) Entrepreneurship Theory, process, practice. NJ John Wiley & Sons.Peng, M. W. (2012). Global strategy. Mason, OH Cengag e Learning.Sloan, P. (2012). Three reasons Facebook has to go public. Retrieved on December 3, 2013 from http//news.cnet.com/8301-1023_3-57368449-93/three-reasons-facebook-has-to-go-public/Sullivan, L. R. (2007). Historical dictionary of the Peoples Republic of China. Maryland A Scarecrow Press, Inc.Vedavalli, R. (2007). Energy for development Twenty-first century challenges of reform and liberalisation in developing countries. London Anthem Press.