Essay about Technical Data Corporation Business Plan

Words: 1108
Pages: 5

Technical Data Corporation Business Plan

1. Technical Data Corporation is in the computer hardware and software business. TDC is in the business of providing liable data in regards to the fixed income market. TDC is going to provide a web based service that will relay historical price data, price analysis, and market commentary on the day to day price variances. Currently the purchases of this information are not willing to pay high amounts to access this information. Additionally, the purchases are not willing to buy any equipment to get this information. The purchases expect to get this information from their current equipment. Many of the competitors in this industry provide some of the same information, but all of them are not
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This agreement will also provide TDC with a convenient mode of advertising its products through current Telerate subscribers. As a result, the assumptions TDC has made in relation to revenues also seem reasonable.

4, There are many issues to consider when investing in this company. First, the general product sounds like an excellent opportunity. Based on competitor profiles, it seems like TDC should be able to capture market share in the Fixed Income / Futures information industry. However, there is a major barrier to entry. Many existing competitors have already developed propriety hardware that many banks or trading firms may already have. For these clients, switching costs may be too high. It is important to find out what percentage of TDC’s target base already has this equipment.

The second major consideration is the financials of the deal. In order to invest in the company, an investor would need to purchase $4,500 in promissory notes and $500 in equity. Overall, the company will be leveraged at a debt to equity ratio of 9 to 1. For a technology-related firm, this is an extremely high ratio and poses significant risks to equity holders. Additionally, because most of the financing seems to be going to product development and distribution costs rather than tangible assets with resalable value, there is significant risk that the firm will not be able to make whole on it’s promissory notes as well.