Globoforce Group PLC - Exit Strategies and Legal Issues

In the last ten years, Globoforce Group PLC has maintained its position in the market and developed a niche for itself in the provision of SaaS-based representative acknowledgment arrangements. The business also provides other services, such as finding labor for administrative tasks and representative upkeep, to Human Resource Departments of other organizations. The business has offices in Ireland’s Durbin and Southborough, Massachusetts. In the past ten years, it has received a lot of attention, including being awarded the greatest workplace in the United States and Ireland in 2013 and 2016. The company’s success in the past decade has been attributed to its high-quality services it offers to its customers and the incorporation of advanced technological systems in its departments.

Based on the 2011 Globoforce Employee Recognition Tracker Survey, more than 800 HR pioneers have benefited from the firm’s services. Additionally, it is evident that 99% of the beneficiaries foresee representative engagement being a key test that they will have to confront. In as much as 86% of companies around the world track worker engagement scores, only 76% of similar respondents track their engagement levels using representative post-employment surveys. Apparently, this implies that most organizations are realizing about engagement issues at the time when representatives are wilfully departing from the firms (Sherman, 2012). Finally, 37% of the HR pioneers claimed that they attach their representative acknowledgments to corporate qualities. One of the main objectives of any organization is profit maximisation, and its failure in meeting this goal may negatively impact its sustainability.

The company’s financial performance has been on the decline in the past two years, and this has been attributed to various factors. Firstly, there has been an increase in the competition levels in the market, and this has contributed to a decline in its consumer demand, thus a reduction in the revenue generation. In 2017, for instance, Globoforce experienced a 2.7% decline in its revenues that was represented by $186,797,000. The profitability levels of the firm also reduced significantly, and it registered a loss of -$6,548,000. In the recent past, investors have exited the organization and shifted to those organizations where they believe that they will enjoy an increase in their returns both in the long-term and in the short-term. The shareholders’ equity for the company in the year ending 2017 stood at -$31,858,000. Liabilities, on the other hand, increased to $95,665,000 exposing Globoforce to more financial risks. Apparently, this implies that the firm’s financial position is low and suitable measures need to be put in place to help in addressing challenges that it currently faces.

With the dwindling financial productivity of the Globoforce Corporation, it is the right time for it to take an exit strategy. The company currently faces a lot of competition from rival firms such as Halogen Software, Terryberry and Kudos and this has contributed to a reduction in its market share (Pakroo & Stewart, 2016). The ever-shrinking consumer demand has also made it hard for the organization to perform at the same level that it used to five years ago. Financial analysts have projected that in the coming years, the firm may continue experiencing a decline in its productivity despite the recent recovery that it has enjoyed. Another reason why the organization needs to exit is that of the reduction in its revenue generation and loss that it registered in the financial year ending 2017. It will be necessary for the firm to come up with a 5-month time frame starting from January 2018 that it will utilize in exiting the market. During the period, the organization will dispose of its assets by looking for a company interested in acquiring all its property.

Question 2: The main exit strategy for Globoforce

There are various exit strategies that an organization can employ and these include mergers and acquisitions, Initial Public Offerings and liquidation. Companies consider exiting the market when they experience a decline in their financial performance and market share. In the case of the Globoforce Corporation, it will be vital for it to specialize on Initial Public Offering (Alspach, 2014). IPO refers to the first time that the stock of a private firm is made public. The organization occasionally obtains an underwriting from that company that may be interested in purchasing the stocks. As a part of the exiting strategy of the Globoforce, the underwriters will be required to facilitate steps such as the formation of an external IPO team, compilation of information regarding Globoforce, submission of the financial statements and filing of the firm’s prospectus with the SEC. One of the benefits that the organization will benefit from using the exiting strategy will be the ability to raise capital within the shortest time possible that it will use in other agendas. In so doing, the company will gain a lot of publicity and should it decide to set up a new business; it will enjoy an increased consumer base. After exiting the market, the firm may decide to rebrand, and in so doing, this will help it increase its productivity.

References

Alspach, K. (2014). Software firm cancels its IPO. Boston Globe

Pakroo, P., & Stewart, M. (2016). Chapter 7: Risk management. Small Business Start-Up Kit, The: A Step-by-Step Legal Guide. Berkeley, California: NOLO. [EBSCO ebook collection]

Sherman, A. J. (2012). Chapter 2: Selecting the best legal structure for growth. Raising Capital: Get the Money You Need to Grow Your Business. New York: AMACOM. [EBSCO ebook collection]