Article Review Paper on Shake Shack Seeks $568m Valuation from IPO Web

Article Review

Platt, E. (2012, January 15). Shake Shack seeks $568m valuation from IPO web. 11 February, 2015. FT.Com. Retrieved from http://www.ft.com/cms/s/0/bd2c7ae0-a0c5-11e4-b8b9-00144feab7de.html.

 The articles summarize the event of Shake Shack seeking a $ 528 million valuation from its initial public offering. Shake Shack is a burger joint that is seeking to obtain a $568 in the next month. The company plans to offer 5 million shares to be sold between $14 and $16. However, the underwriters will be given an option to buy extra 750,000 shares, making a total of $92 million. The company targets a dual class share plan, and the capital obtained would be used in expanding existing restaurant and the opening of new stores and restaurants (Platt, 2012). The investors of Class A shares will obtain 14.1 per cent of the company’s voting interest while 44.5 per cent of the economic risks remain with the company. The company’s investors, including Mr. Meyer and others will have a 68.4 % of the voting interests using its class B share and 17.5% using its class A shares.

The investors are sought to evaluate the progress of Shake Shack IPO in the current markets. Today, the increased market volatility has affected the investors’ interests on the new companies’ listings in trading. The company will seek to obtain a higher valuation compared to its peers, such as Loco and Potbelly (Frykman & Tolleryd, 2012). Financial analysts have claimed that there are strong reasons for the higher valuation of the company. Since 2014, shake Shack’s sales increased by 41 per cent from the past years. The strategic plan of the company aims at opening new shacks in the country and in other countries. This indicates the company’s focus to maximize global market space (Platt, 2012). The understanding of the company’s valuation is significant in determining the value of corporate valuation. Some of the factors to be considered include the growth plans and financial performance as reflected. Therefore, corporate valuation has some strong implications on the growth and development of a business.

References

Frykman, D., & Tolleryd, J. (2012). The Financial times guide to corporate valuation. London, UK: Pearson UK.

Platt, E. (2012, January 15). Shake Shack seeks $568m valuation from IPO web. 11 February, 2015. FT.Com. Retrieved from http://www.ft.com/cms/s/0/bd2c7ae0-a0c5-11e4-b8b9-00144feab7de.html.