Taking Private Companies Public
Full Service Facilitator Serving the Needs of Developing Companies

Advantages

Access to Capital

  • By offering stock for sale to the public, a company can access a substantial source of corporate funding.
  • Through a public offering, founders suffer less dilution when raising capital. Once public, a company's financing alternatives are increased.
  • A publicly traded company can return to the public markets for additional capital via a bond or convertible bond issue or secondary equity offering.
  • In general, public companies have a higher valuation than private enterprises.

Liquidity

  • By going public, a company creates a public market for its stock.
  • This liquidity can elevate the value of the corporation. The stock's liquidity is contingent on a variety of factors including registration rights, lock-up restrictions and holding periods.
  • Liquidity can also provide an investor or company owner an exit strategy, portfolio diversity and flexibility of asset allocation.

Compensation

  • Many companies use stock and stock option plans to attract and retain talented employees. This reward could be deemed desirable if the stock has a public market.
  • Owners and employees may have specific restrictions relating to the liquidity and sale of the stock. A public offering can create a market for the company's stock.
  • A stock plan for employees demonstrates corporate good will and allows employees to become partial owners in the company where they work.
  • An allocation of ownership or division of equity can lead to increased productivity, morale and loyalty.

Publicity

  • A public offering of stock can generate prestige, publicity and visibility, all of which is effective when marketing your company.
  • Public companies are more likely to receive the attention of major newspapers, magazines and periodicals than a private enterprise.
  • The proper use of press releases, interviews or news stories can increase investor awareness, shareholder value and demand for the stock.
  • The publicity received from a public offering encourages new business development and strategic alliances.

Exit Strategy

  • One of the important benefits of a public offering is the fact that the company's stock eventually becomes liquid, offering reward and financial freedom for the founders and employees.
  • Officers, directors and controlling shareholders may have a ready market for their shares, which means that they can sell their interest at retirement, for diversification or for other reasons.

Disadvantages >



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