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G-III Apparel Group Inc IPO Valuation Case Study
Finance & Accounting
Pages 4 (1004 words)
1. How sound was G-III’s business? Was it suitable for an IPO? G-III is a great opportunity for investors looking to obtain capital gains by investing in a company with lots of potential. G-III is an apparel company that specializes in leather products. Leather is a material that represents 90% of the raw materials used by the company.
The growth looks impressive, but the firm should not expect that type of continuous growth since in the apparel industry prolonged above average growth is rare. The company operates in a fragmented industry, but its 10% market share is relative large which gives the firm a competitive advantage. The company is perfectly positioned to achieve further growth by utilizing an acquisitions strategy. A positive aspect of the IPO plans of the firm is that company plans on reducing its long term and short term obligations from $22.3 million to $6.4 million. This strategic move is very wise because the firm is reducing its fixed costs by lowering its total debt. The organization has a workforce composed of 235 employees. G-III generated in 1989 total sales of $98.78 million. A strategy that has helped the company generate revenues at different price points is the use of multiple brands. Three of the brands the firm owns are G-III, Siena, and Cayenne. 6. Who is Oppenheimer? What was the role of Oppenheimer in the process? Was Oppenheimer’s role commensurate with its fees? Oppenheimer is the firm that handled the IPO. The person from Oppenheimer that was in charge of the IPO was Richard White. The IPO process began in September 1989 and it was completed three months later on December of 1989. ...
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