Go Public! Go Big or Go Home!
A large number of reasons exist for a company to decide to go public, such as obtaining financing outside of the banking system, increased public awareness of your company, insiders wanting to capture profit or reducing your company debt.
Going public and offering stock in an initial public offering represents a major milestone for most privately owned companies.
The main reason companies decide to go public, however, is to raise a lot of money and spread the risk of ownership among a large group of shareholders. Spreading the risk of ownership is especially important when a company grows, with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company.
Furthermore, taking a company public reduces the overall cost of capital and gives the company a more solid standing when negotiating interest rates with banks. This would reduce interest costs on existing debt the company might have.One of the less talked about advantages of going public is is an increased public awareness of your company.
So why go public? I will give you 7 solid reasons!
- Cash: Now this is the most obvious and popular reason why companies go public. Companies may want to expand their existing business and profits
- Credibility: Being a publicly trading company is considered a major achievement. Going public provides a sense of corporate stability.
- Liquidity:When the company is private not only Companies’ major shareholder and venture capitalists but also their employees have equity in the form of stock options and these employees have worked hard to grow the company. So when the company is going public these employees cash in their rewards and trust me rewards are pretty high.
- Acquiring companies: a common strategy used often. If a company is large enough, the objective is to acquire your small competitors
- Attracting top talent: Another strategy for going public is people attract a lot of talent or new employees by giving stock options.
- Increasing Value of company: When a company goes public, the company is in healthy financial condition, making profits and has good future prospects. This makes the company more attractive and could place higher valuation which leads to increase in share price which in turn increases the Net worth of majority shareholders.
- Brand Equity: increases the credibility of the company as more information is disclosed now and the public can get to know the company much better. Going public attracts the new group of customers.This may lead to increased revenues and profits which ultimately lead to increase in market share thus becoming a stronger player in the industry.
So in today’s market- it’s clear, Going public is the way to go. Let’s get started today! Call us 775-331-1111