Business Case Studies & Business Publications

Eagle Finance Corp. (B)

Chaplinsky, Susan

Case

Eagle Finance Corp. (B)

Chaplinsky, Susan

F-1102 | Published November 22, 1995 | 11 pages Case

Collection: Darden School of Business

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Product Details

This case and its companion (UVA-F-1095) provide comprehensive coverage of a firm's decision to undertake an initial public offering (IPO). The company is a nonregulated financial firm in a rapidly growing area of consumer finance (high credit-risk automobile loans). The A case follows the firm from its first meeting with investment bankers to the determination of a preliminary IPO price range. In the B case, the firm's "road show" encounters a "cold-issue" market, and Eagle is unable to sell its shares at a price near the preliminary file range. Management is confronted with the tough choice of whether to proceed with the IPO or cancel it. The cases provide a rich opportunity to compare management's internal valuation of the firm (derived from market multiples and discounted-cash-flow analysis) with the market's assessment of value. Excel spreadsheet files are available for use with this case and its teaching note (UVA-F-1102X).