Question: Without actually doing any calculations, describe how the preliminary offering range for the price of an IPO would be determined? MINI CASE Randys, a family-owned

Without actually doing any calculations, describe how the preliminary offering range for the price of an IPO would be determined?

MINI CASE

Randy’s, a family-owned restaurant chain operating in Alabama, has grown to the point where expansion throughout the entire southeast is feasible. The proposed expansion would require the firm to raise about $15 million in new capital. Because Randy’s currently has a debt ratio of 50 percent, and also because the family members already have all their personal wealth invested in the company, the family would like to sell to the public to raise the $15 million. However, the family does want to retain voting control. You have been asked to brief the family members on the issues involved by answering the following questions:

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