G-III Apparel Group Inc IPO Valuation Case Study

G-III Apparel Group Inc IPO Valuation - Case Study ExampleThe growth looks impressive, only the loaded should non expect that type of continuous growth since in the apparel industry extensive above average growth is rare. The company operates in a fragmented industry, but its 10% marketplace share is relative large which gives the firm a competitive advantage. The company is perfectly positioned to achieve get along growth by utilizing an acquisitions strategy. A positive aspect of the IPO plans of the firm is that company plans on trim down its long term and short term obligations from $22.3 million to $6.4 million. This strategic move is very wise because the firm is reducing its fixed costs by lowering its total debt. The organization has a workforce peaceful of 235 employees. G-III generated in 1989 total sales of $98.78 million. A strategy that has helped the company generate revenues at different malign points is the use of multiple brands. Three of the brands the fir m owns are G-III, Siena, and Cayenne. 6. Who is Oppenheimer? What was the role of Oppenheimer in the process? Was Oppenheimers role commensurate with its fees? Oppenheimer is the firm that handled the IPO. The person from Oppenheimer that was in charge of the IPO was Richard White. The IPO process began in phratry 1989 and it was completed three months later on December of 1989. The stock of G-III following the IPO was going to be traded in NASDAQ. The underwriter monetary value obtained by Oppenheimer was $0.91per share. I believe the fees that Oppenheimer negotiated were reasonable. The $0.91 per share legal injury was equivalent to a 7% commission. 7. Was $13 an appropriate price for G-III? What was the intrinsic harbor of a share of G-III? The intrinsic range of a stock pile be defined as the actual value of the firm which whitethorn be different that the market value of the shares of a company. There are several metrics that can help an investor determine the intrinsic va lue of a company. The book value of G-III can be metric by subtracting total debt from total assets (Little). Prior to the IPO the book value of the company was $18,923,000. The book value per share of the company was $4.07 (18923000 / 4644144). The market to book ratio assuming the $13 price is the market price was $3.19. The earnings per share of the firm in 1989 was $1.28. The price earnings ratio is calculated dividing the market price of the company by its EPS (Garrison & Noreen). Based on the $13 IPO price the price-earnings ratio of the company is $10.15. due(p) to the intrinsic value of the company I believe that the firm got a good deal by marketing the stocks at $13, since this price is three times higher than the book value of the firm. 8. How would picking the amiss(p) comparables influence estimates? Choosing the wrong comparable can distort the information which can lead to making sturdy decisions in regards to the valuation of G-III. One of the problems the compa ny faced when it was choosing comparables was that most companies in this niche industry were not public which made it hard to find information regarding the industry financial performance norm. The problem with choosing wrong comparables is that it can undervalue or overvalue a firm. If the analysis undervalues the firm the company would be selling the stock at too cheap of a price. An overvaluation could hurt the company because investors might not be willing to buy at the high price which could lead to disastrous results in the IPO. 12. Did G-III endanger