Impact of Initial Public Offering on Financial Performance of Mark and Spenser in UK Retail Sector

Research methods in finance
and accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
Background of study....................................................................................................................3
Research aims and objectives......................................................................................................4
Research Question.......................................................................................................................4
Rationale......................................................................................................................................4
Literature Review............................................................................................................................5
Theme 1: Importance and Benefits of Initial Public Offering.....................................................5
Theme 2: Impact of Initial Public Offering on the financial performance of company..............6
Theme 3: Issues faces by company that can arises after Initial Public Offering (IPO)...............8
Research Methodology..................................................................................................................10
Research Type...........................................................................................................................10
Research approach.....................................................................................................................10
Research philosophy..................................................................................................................11
Research design.........................................................................................................................11
Data Collection..........................................................................................................................11
Sampling....................................................................................................................................11
Data analysis..............................................................................................................................12
Ethical consideration.................................................................................................................12
Research Limitation...................................................................................................................12
Timeline.........................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Background of study
Initial Public Offering (IPO) is basically a process with the help of which private company
go public by selling their stock to general public. In simple term, when a private company first
sell its shares to general public than it is known as initial public offerings. This allow the
company to raise the funds and capital from the public investors with the help of which they can
expand the business to both national and international level. It means this give greater ability to
company to expand and grow in the market. The impact of initial public offerings over the
business is such that they will able to enhance or increase their public image. With the help of
IPO, the business will come in the eye of government, local community, big investors or
financial institution and also customers (Wang and et.al., 2019). As a public listed company
because of IPO, they can also able to grasp the opportunity of merger and acquisition which
basically result into the reduction of competitors in the market.
In order to identify and analyse the impact of initial public offerings over the company
performance, the researcher has selected Mark and Spenser company of UK. M&S company
become a public limited company in the year 1926 in order to finance some new developments.
Mark and Spenser (M&S) is a British multinational retailer company having headquarter in
London, UK. Currently, the company offers variety of clothing, home products, food products to
its customers. The company was founded in the year 1884 and became public limited company
in the year 1926. With the help of this step, M&S company able to generate more funds and
capital from the general public of UK and use the same for their expansion. As per 2020 report,
there were 1037 stores of M&S along with the 472 other store locations situated around the
world which is because of the funds generated from general public. The company has announced
in the year 2011 that they spend around £600 million on its UK stores in the year 2011 to 2014
which is after they go public (Choudhary and Piparo, 2020).
In the year 2020, the sales revenue, operating income and net income of M&S company
was £10181.9 million, £254.8 million and £27.4 million (Eisenberg, 2019). Not only that, the
number of employee connected with M&S company as per 2020 data is 78000 employees. This
proposal will discuss the important and benefits of IPO in present time along with its impact over
the performance of company in order to enhance the user’s knowledge on IPO. The issues face
by company after they can arise IPO will also an aspect of this proposal.

Research aims and objectives
Aim:
 The aim of current study is to identify the impact of Initial Public Offerings (IPO) on the
company financial performance in the context of UK retail sector. A study on Marks and
Spenser.
Objectives:
 To develop understanding about the importance and benefits of Initial Public Offering.
 To recognize the impact of Initial Public Offering over the financial performance of
M&S company.
 To identify the challenge or complexity that can arise after Initial Public Offering.
 To recommend effectual strategies to M&S to deal with the issues arises after IPO.
Research Question
Q.1. What is the importance and benefits of Initial Public Offering?
Q.2. What are the impact of IPO on the financial performance of the company?
Q.3. What are the issues faces by company which is arises after Initial Public Offerings?
Rationale
In the current dynamic and uncertain environment such as Covid-19, businesses are facing
lots of difficulty in fundraising. It is because of the lack of trust of banks or people towards
private company. Presently, big investors want to invest their money in only those business
which are publically listed on any stock exchange such as London Stock Exchange. The impact
of which private companies need to pay higher interest rates on the bank loan which leads to
higher cost of capital (Basias and Pollalis, 2018). Thus, if any company wants to raise high
capital from the market in low cost then they have to go public via IPO. Hence, the present
research topic is significant for the private companies who wants to go public and arise Initial
Public Offerings. The IPO is also plays important role for the company in motivating their
employees because for public limited firms it is very easy to set up employee stock option plans.
The impact of IPO over the business in positive way is that they will get money which they
can further use it to grow the business without incurring any debt but on the other hand, the