Entrepreneurial Finance and Risk Management

Running head: ENTREPRENEURIAL FINANCE AND RISK MANAGEMENT
Entrepreneurial Finance and Risk Management
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1ENTREPRENEURIAL FINANCE AND RISK MANAGEMENT
Executive Summary:
This report analyses the financial position of the Spatial Technology Inc and their financial performance,
which resulted in less investment interest from the investors in 1992 and 1996 IPOs. Spatial Technology
Inc is a US based technology company developing and providing 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 attract less interest from the investors. In this report,
the reason behind such a failure have been discussed and analyzed with the help of some valuation
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 AND RISK MANAGEMENT
Table of Contents
Introduction:................................................................................................................................................3
Brief overview of the company:..................................................................................................................3
Establishing the case study:.........................................................................................................................3
Analysis, Outcomes and understanding of Valuations:................................................................................4
Valuation A:............................................................................................................................................4
Valuation B:............................................................................................................................................5
Valuation C:............................................................................................................................................5
Spatial’s Strategy to penetrate the market:..................................................................................................7
Impact of Spatial’s Management on its IPOs:..............................................................................................7
Fair price of the share for potential investors:.............................................................................................8
Feasibility of investment in the shares of Spatial technology Inc:...............................................................8
Reflective assessment of the valuation:.......................................................................................................9
Best recommended valuation technique as 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 AND RISK MANAGEMENT
Introduction:
Every organization needs capital for their long-term and short-term investments and fund
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 returns 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, such an analysis has been done based 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 interest 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 reason behind such a failure (spatial.com 2019).
Brief overview of the company:
Spatial Technology Inc is one of the pioneering technology companies operating with
Excellencies in the computer software industries. The company was established in 1986 and they are
having their headquarter in Broomfield, Colorado, USA. They first commercially offered a 3D modeling
software in the market and started their journey. 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).
Establishing the case study:
Companies need finance or fund when they are going to expand their operations. Companies can
go for debt financing to meet their capital needs or they can go for equity financing. They can issues
shares for raising capital or they can borrow loan for meeting the capital needs. In the given case study