In two years Mr. A grew A-Foods Limited from a start-up to a $38 million business. At the same time, the stock market had become more interested in investing in small companies. Therefore, Mr. A expected that “going public” would be a good way to raise large sum of money for his new business plans.

Mr. A and his managers worked with every possible financing source, from friends and family, to banks and investors. Now they would base their plan on being able to raise millions from both the private and public markets.

Mr. A intended to sell stock in the company in a $30 million IPO (initial public offering). Sales that year were well on their way to $58 million, and the business needed the capital to support that volume level. What they did not expect was how much time company managers would need to spend on the fund-raising effort.

Then, Mr. A, s financial advisors told him the market no longer had any interest in new “small-cap” IPOs. So the company had to go back private sources for money. Nine months after the IPO that was not A-Foods Limited board, out of cash and out of possibilities for raising cash, filed for bankruptcy.

1) How could Mr. A have better used his management team and resources?

2) What do you think was responsible for A-Foods Limited downfall?