Part VI CBC Video Case

These questions are based on Canadian Broadcasting Corporation videos that accompany the textbook. In addition to whatever in-class use your instructor may have given them, they're available on this website for online viewing. If directed to do so by your instructor, you can answer the discussion questions online and email the results.
     These videos are intended only for students using the 4th Canadian Edition of Fundamentals of Corporate Finance. To view the video, you'll require a password. Refer to page 472 in your textbook and use the first word appearing in the main text column as both 'username' and 'password.' Use of the word is case-sensitive.
     The free RealPlayer plug-in is required in order to view the videos. If needed, the plug-in can be downloaded from Real.

The Downside of Going Public
IPO: Dr. Jekyll and Mr. Hyde: Over 130 Canadian companies decided to go public in the last years of the 20th century. They wanted to expand, yet they lacked the necessary funds to do so. Their earnings were insufficient, or they could not obtain sufficient bank loans, or maybe both. Once public, these companies got their wish realized–the money started to pour in. However, they also discovered that managing this newly acquired growth potential and dealing with public pressure is not always a recipe for success.
     This video segment focuses on several Canadian companies to illustrate the advantages and disadvantages of becoming a publicly held corporation. The CEO of Lee Valley Tools considers that, for the time being, he is not eager to report to anyone but himself, and he is not willing to entertain the possibility of an IPO. Other firms, such as Paragon Entertainment went public, but subsequent to issuing shares to the public, became overwhelmed and declared bankruptcy. The CEO of Sleeman Breweries has taken the firm public, but he is ambivalent about the merits of his decision. His contention best summarizes the dilemma of bringing in outside shareholders: have the right reasons, weigh all the implications, and know what you are doing. In spite of the fact that the story concentrates on the negatives, some of the advantages of going public transpire throughout the story.

Additional Resources:
IPO.com
Sleeman Breweries Limited
Lee Valley Tools
Ontario Securities Commission

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View The Downside of Going Public

1		What are the reasons that keep Leonard Lee, the CEO of Lee Valley Tools, from taking his company public?
2		What are the advantages of staying private, according to Leonard Lee?
3		What are the chief disadvantages of going public according to John Sleeman, the CEO of Sleeman Breweries?
4		In the last four to five years, over 150 Canadian companies went public. While there are disadvantages to going public, there are certainly several advantages as well. What are these advantages?