The Segway IPO

Dean Kamen, Chairman and CEO of Segway LLC, was pleased overall by the public reaction to his newly-announced Human Transporter (HT), pictured below. Although a few media pundits decried the hype that preceded its announcement, Kamen felt that they would have been unhappy with any product less than a Star Trek transporter. Postponing a consumer version for 12 months, Kamen had decided to first focus on sales to corporate customers. In addition to initial sales to the U.S. Postal Service, Amazon.com, and the National Park Service, Kamen was sure that many large manufacturing and distribution corporations would jump to purchase the HT to replace the clunky bicycles that are currently used to convey managers around the cavernous factories and warehouses.

Kamen had just left a two-hour meeting chaired by Scott R. Frock, his Director of Finance, in which the enormity of the need for capital for the construction production facilities had really hit home. The crash of the tech sector 18 months earlier had effectively ended the exuberant enthusiasm that had greeted initial public offerings (IPO’s) of new Internet-focused firms over the previous two years. Although Kamen still had strong reservations, Frock had argued that Segway’s IPO would garner a warm reception, as the Segway HT was one of the very few new high-tech applications that was strongly appealing and that had nothing to do with e-commerce.

With such an urgent need for cash, Kamen knew that he had to move quickly. He is leaning towards choosing the investment firm of Morgan-Stanley to underwrite the IPO, but has not yet started any of the tasks necessary for issuing his IPO, as outlined in Exhibit 1 below. He took a deep breath and picked up the phone.

Exhibit 1

Questions

1. How long will it take Dean Kamen to issue this IPO?
2. Which of the 14 tasks should Kamen oversee most closely?
3. Which task would most likely be completed on time without close supervision?
4. Kamen is considering getting in touch with the SEC in order to try to persuade them to speed up their reviews of his registration statement (Tasks 4 and 6), but doesn’t want to risk antagonizing them. Is it worth the risk to shave two days off of either or both reviews?
5. In order for Segway and Morgan Stanley to be knowledgeable enough to negotiate over the final offering price, they need to be able to predict investor interest for Segway.
   1. Is this necessity conveyed in Exhibit 1?
   2. It turns out that they will have a reasonably accurate prediction of investor interest after only 20 days (although they will still need to drum up investor interest for the remaining 40 days). How (if at all) would this earlier prediction affect the project?

Price: $11.5

Solution: The downloadable solution consists of 4 pages, 750 words and 3 charts.
Deliverable: Word Document