{"id":4347,"date":"2021-02-10T19:00:27","date_gmt":"2021-02-10T19:00:27","guid":{"rendered":"https:\/\/marc.deschenaux.com\/?p=4347"},"modified":"2023-05-14T17:57:49","modified_gmt":"2023-05-14T17:57:49","slug":"the-wagons-theory-applied-to-initial-public-offerings-ipo","status":"publish","type":"post","link":"https:\/\/marc.deschenaux.com\/pt\/articles\/the-wagons-theory-applied-to-initial-public-offerings-ipo\/","title":{"rendered":"The Wagons Theory applied to Initial Public Offerings (I.P.Os)"},"content":{"rendered":"<div data-elementor-type=\"wp-post\" data-elementor-id=\"4347\" class=\"elementor elementor-4347\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-3e5c508 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3e5c508\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-213c791\" data-id=\"213c791\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-200eee9 elementor-widget elementor-widget-text-editor\" data-id=\"200eee9\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>As discussed in my previous article \u201c<a href=\"https:\/\/www.linkedin.com\/pulse\/your-company-ready-ipo-initial-public-offering-marc-deschenaux\/\" target=\"_blank\" rel=\"noopener\">Is your company ready for an I.P.O. Initial Public Offering ?<\/a>\u201d, the main barriers preventing an IPO to happen for a company which is ready, willing and able to pursue it are the following:<\/p><ol><li>The preparation cost of an IPO is prohibitive.<\/li><li>There is no guarantee that the IPO will succeed.<\/li><li>Bankers and other professionals putting their career at stake will not authorize the IPO without:<ul><li>Proper due diligence ensuring financial securities markets\u2019 safety;<\/li><li>Validation of the business model;<\/li><li>Sufficient revenue making the company at least cash-flow positive and if not profitable;<\/li><li>Strong and stable growth.<\/li><\/ul><\/li><\/ol><p>Em outras palavras, n\u00e3o deve haver d\u00favidas de que a empresa est\u00e1 no caminho certo para o sucesso.<\/p><p>Having founded two investment banks, a business process consulting company, a non-bar law firm specialized in private and public equity offerings and a corporate financing experts\u2019 firm, I saw a number of companies with a high profitability potential that deserved investment banking services but could not afford them due to costs prior to the distribution of the securities, especially pertaining to the preparation and drafting of disclosure.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a4dcb78 elementor-widget elementor-widget-heading\" data-id=\"a4dcb78\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\">The Wagons Theory<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e2e3f69 elementor-widget elementor-widget-text-editor\" data-id=\"e2e3f69\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>According to my mentor, as I have not found any source of information about that, Howard Hughes invented the Theory of Wagons. Following the legend, he had installed a giant train in his garden and had to put more than one wagon to give a ride through his property to groups of his guests. Seeing the wagons attached to each other inspired him to create a corporate growth theory.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d06d794 elementor-widget elementor-widget-image\" data-id=\"d06d794\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"481\" height=\"105\" src=\"https:\/\/marc.deschenaux.com\/wp-content\/uploads\/train.jpg\" class=\"attachment-large size-large wp-image-4350\" alt=\"\" srcset=\"https:\/\/marc.deschenaux.com\/wp-content\/uploads\/train.jpg 481w, https:\/\/marc.deschenaux.com\/wp-content\/uploads\/train-300x65.jpg 300w, https:\/\/marc.deschenaux.com\/wp-content\/uploads\/train-16x3.jpg 16w\" sizes=\"(max-width: 481px) 100vw, 481px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e8fab4a elementor-widget elementor-widget-text-editor\" data-id=\"e8fab4a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>He thought that the locomotive which is the heaviest element of the train was symbolizing its core company that was a very well-established institution. The more a company is well-established, the closer it is to the locomotive and the less a company is well-established, the further it is from the locomotive. Start-ups are at the rear end of the train.<\/p><p>Using this model, Howard Hughes was using the cash flow of his best-performing companies to finance his new ventures. Making basic financial mathematics analysis, it seems obvious that such system can only work if the locomotive and first wagons companies are highly profitable and that the investment in new ventures are far less than this profitability. According to my mentor, a ratio of 3 between the sum of profitable companies and the total investment required by the start-ups should be considered as a minimum for safety but I could never figure out how he came up with said ratio.<\/p><p>This theory made a big impression on me because I saw in it a corporate chain financing and I thought it could be the solution to overcome the first barrier for an IPO to happen. For a long time, I wondered how I could make IPOs cascading, the previous pulling the next one.<\/p><p>When I got to learn about the JOBS Act (Jumpstart Our Business Startups Act), I realized that the cost of small IPOs had been drastically reduced and thus that financing IPOs through a domino cascading process was now possible.<\/p><p>My first idea was to take a part of the proceeds of the first IPO to finance three other IPOs and to apply the same principle to said three other IPOs as on the scheme hereunder.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-122c959 elementor-widget elementor-widget-image\" data-id=\"122c959\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"860\" height=\"1024\" src=\"https:\/\/marc.deschenaux.com\/wp-content\/uploads\/TheorieWagonsIPOs-chart-860x1024.jpg\" class=\"attachment-large size-large wp-image-4351\" alt=\"\" srcset=\"https:\/\/marc.deschenaux.com\/wp-content\/uploads\/TheorieWagonsIPOs-chart-860x1024.jpg 860w, https:\/\/marc.deschenaux.com\/wp-content\/uploads\/TheorieWagonsIPOs-chart-252x300.jpg 252w, https:\/\/marc.deschenaux.com\/wp-content\/uploads\/TheorieWagonsIPOs-chart-768x914.jpg 768w, https:\/\/marc.deschenaux.com\/wp-content\/uploads\/TheorieWagonsIPOs-chart-10x12.jpg 10w, https:\/\/marc.deschenaux.com\/wp-content\/uploads\/TheorieWagonsIPOs-chart.jpg 1260w\" sizes=\"(max-width: 860px) 100vw, 860px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-fa08cd0 elementor-widget elementor-widget-text-editor\" data-id=\"fa08cd0\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>However, there were a number of problems from a securities markets regulation and from a disclosure standpoints.<\/p><p>How to avoid these IPOs to be considered a group of companies by the regulator ? How to avoid the birth of a tree of shareholding relationships among all these companies ? But for those answers, I charge serious money.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"<p>Conforme discutido em meu artigo anterior \u201cSua empresa est\u00e1 pronta para uma oferta p\u00fablica inicial de IPO?\u201d, as principais barreiras que impedem que um IPO aconte\u00e7a para uma empresa que est\u00e1 pronta, disposta e apta a persegui-lo s\u00e3o as seguintes: O custo de prepara\u00e7\u00e3o de um O IPO \u00e9 proibitivo. N\u00e3o h\u00e1 garantia de que o IPO\u2026 <a title=\"The Wagons Theory applied to Initial Public Offerings (I.P.Os)\" class=\"read-more\" href=\"https:\/\/marc.deschenaux.com\/pt\/articles\/the-wagons-theory-applied-to-initial-public-offerings-ipo\/\" aria-label=\"Leia mais sobre The Wagons Theory applied to Initial Public Offerings (I.P.Os)\">Ler mais<\/a><\/p>","protected":false},"author":1,"featured_media":4349,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":3,"footnotes":""},"categories":[3,49],"tags":[19],"class_list":["post-4347","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-beginners","tag-investment"],"_links":{"self":[{"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/posts\/4347","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/comments?post=4347"}],"version-history":[{"count":0,"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/posts\/4347\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/media\/4349"}],"wp:attachment":[{"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/media?parent=4347"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/categories?post=4347"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marc.deschenaux.com\/pt\/wp-json\/wp\/v2\/tags?post=4347"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}