Analysis of Spatial Technology's IPOs and Valuations

Running head: ENTREPRENEURIAL FINANCE
Entrepreneurial Finance
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1ENTREPRENEURIAL FINANCE
Executive Summary:
This report analyses the financial position and performance of the Spatial Technology, which resulted in
less investment interest from the investors in 1992 and 1996 IPOs. Spatial Technology Inc is a technology
company based on US, developing and supplying 3D modeling software and many other information
system solutions to national and international markets. In 1992 and 1996, the company offered its shares
to public for raising capital but it catch the attention of less interest from the investors. In this report, the
reason behind such a failure have been discussed and analyzed with the help of some evaluation
techniques. Lastly, the report concludes with the possible initiatives that could have been helped the
company to gain investors interest and perform financially well in the market.

2ENTREPRENEURIAL FINANCE
Table of Contents
Introduction:................................................................................................................................................3
Overview of the company:...........................................................................................................................3
Key points of the case study:.......................................................................................................................3
Analysis of Valuations and understanding its outcomes:.............................................................................4
Valuation A:............................................................................................................................................4
Valuation B:............................................................................................................................................5
Valuation C:............................................................................................................................................5
Spatial’s pricing Strategy to penetrate the market:......................................................................................7
Impact of Spatial’s Management’s decision on its IPOs:.............................................................................7
Fair price assumption of the share for potential investors:...........................................................................8
Feasibility of investment in Spatial technology Inc:....................................................................................8
Reflective evaluation of the case study:.......................................................................................................9
Best valuation technique which can be learned from above:.....................................................................10
Conclusion and recommendation:..............................................................................................................10
References and bibliography:....................................................................................................................12
Appendix:..................................................................................................................................................15
Valuation A:..........................................................................................................................................15
Valuation B:..........................................................................................................................................16
Valuation C:..........................................................................................................................................17

3ENTREPRENEURIAL FINANCE
Introduction:
Every Company needs capital for short term and long term, for financing their short term and
long term requirements. They can raise the capital from various sources, it can be raised through the issue
of equity shares or it can be from debt capital. In every such sources of capital, there is some risk
associated with it. More the risk is assumed more the profits can be generated, but there must be a proper
tradeoff between the risk and return to achieve the overall objective of wealth maximization of an
organization (Pinto, Robinson and Stowe 2015). In this report, an analysis has been done on the case
study of Spatial Technology Inc. They have failed to raise sufficient amount of share capital in 1992 and
1996 IPOs beaus of less significance from the investors to invest in the shares of the Spatial Technology
Inc. In the following paragraphs, some valuations have been done based on some assumptions and
forecasts to know the cause behind such a failure (spatial.com 2019).
Overview of the company:
Spatial Technology Inc is one of the big technology companies of US, operating with
Excellencies in the computer software industry. The company was established in 1986 and they are
having their headquarter in Broomfield, Colorado, USA. They first developed and commercially offered a
3D modeling software in the market. They had been performing financially and operationally well. To
expand their business and to meet the rising capital needs they went for IPO in the year 1992, but they did
not get sufficient response from the investors. Later on, they offered their shares for public in 1996 again,
but once again investors showed less interest in that investment options (spatial.com 2019).
Key points of the case study:
For expansion and growth fund is required for financing and investing in the new opportunities. It
can be raised from debt issuing or shares issue. They can issues shares to raise capital or they can borrow
the fund from lenders or banks. In the given case study the Spatial Technology Inc was also planning for