Expert answer:Team Project 2

Solved by verified expert:Follow instruction that I give it below Do it on Excel or Word
team_project_2.pdf

Unformatted Attachment Preview

BUS1 173A – Financial Management – Theory and Policy
Team Project #2
Facebook IPO and Corporate Governance Research Analysis (40 points)
This project provides an opportunity to get some hands-on experience applying corporate finance
theory and models to real firms. This is a group project. Each group should have 4 to 5 individuals.
The group should write one report (in either Excel or Word) and upload it to Canvas by Friday,
November 17th. Late assignments will not be accepted. The report should be well organized, clearly
written, and free of grammatical and spelling errors. The report should also be free of plagiarism.
Please cite the source whenever using someone else’s idea in you report, even if paraphrasing the
idea.
Facebook’s public offering on May 18, 2012 was the biggest IPO in Internet history, easily topping
Google’s initial public offering eight years earlier. Your assignment is to analyze the IPO and
evaluate current corporate governance of Facebook.
1. Begin by navigating to the SEC EDGAR Web site, which provides access to company filings:
http://www.sec.gov/edgar.shtml. Choose “Search for Company Filings” and pick search by
company name. Enter “Facebook” and then search for its IPO prospectus, which was filed on the
date of the IPO and is listed as filing “424B4” (this acronym derives from the rule number
requiring the firm to file a prospectus, Rule 424(b)(4)). From the prospectus, calculate/determine
the following information (show your work):
a. The underwriting spread in percentage terms. How does this spread compare to a typical
IPO?
b. The size, in number of shares, of the greenshoe provision. What percent of the deal did
the greenshoe provision represent?
c. The list of underwriters/investment banks of the underwriting syndicate.
2. Next, navigate to Google Finance and search for “Facebook.” Using the data provided by Google
Finance calculate the following information (show your work):
a. Determine the closing price of the stock on the day of the IPO (use the “Historical prices”
link). What was the first day return? How does this return compare to the typical IPO?
b. Calculate the performance of Facebook in the three-month post-IPO period. That is,
calculate the return an investor would have received if he had invested in Facebook at the
closing price on the IPO day and sold the stock three months later.
c. What was the return for a one-year holding period?
3. Prior to the public offering, Facebook was able to raise capital from all the sources mentioned in
class. Let’s concentrate on one particular source, Microsoft Corporation.
a. Microsoft made one investment in Facebook, during October 2007. Go to Facebook’s
corporate news Web site (http://newsroom.fb.com) and locate the press release
announcing this investment. Using the information in that press release and the number of
shares owned by Microsoft listed in the IPO prospectus, calculate the per share price
Microsoft paid.
b. How much money did Microsoft receive from the IPO (assume Microsoft sold all shares
in the IPO)?
c. Calculate the holding period return (using the IPO price) that Microsoft earned on its
investment.
1
BUS1 173A – Financial Management – Theory and Policy
4. Facebook had only one angel investor, Peter Thiel (the founder of PayPal). Mr. Thiel invested
more than once in Facebook, both as an angel and, in later rounds, on behalf of investors in his
venture capital firm, Founders Fund. As an angel, Mr. Thiel invested $500,000 in September
2004. Assuming that all the shares he received in the angel round were registered under the name
Rivendell One LLC, use the information in the prospectus to calculate:
a. The per share price he paid as an angel.
b. The amount of money he received from the IPO (if all shares are sold).
c. The holding period return (using the IPO price) he made on his investment.
5. Using the information provided in the Facebook prospectus, and in the annual report and other
documents available on the Facebook’s investor relations webpage, analyze various available
corporate governance mechanisms (e.g., the structure of the board, executive compensation, etc.)
and give your opinion of the governance of Facebook.
2
…
Purchase answer to see full
attachment

How it works

1. Paste your instructions in the instructions box. You can also attach an instructions file
2. Select the writer category, deadline, education level and review the instructions 
3. Make a payment for the order to be assignment to a writer
4.  Download the paper after the writer uploads it 

Will the writer plagiarize my essay?

You will get a plagiarism-free paper and you can get an originality report upon request.

Is this service safe?

All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades