In these times of financial difficulties owning a private
company might be too difficult to maintain. There are many
reasons why private companies go public and in times of financial
struggles it is best to take precautionary actions before watching
your company to gradually depreciate and eventually get broke.
Maintaining your private state is not that advisable because
you are not the only one that will be affected but also the
people who are getting their daily living from the company.
Certainly there are risks but if you focus on the benefits
that it may have when it goes public, there will be a higher
chance of helping it not just to survive but to prosper.
Going public is not an easy task either. Before you take your
business to go public, there are processes that should not be
rushed even if you want to immediately raise an additional capital.
The transition process of a private company going public is not
that easy and things should be carefully planned. Before
getting to the benefits of try to find answers first on the
most basic questions in the world, and that is who, what, when,
where, and why.
The Who, What, When, Where, and Why of a Private Company Going Public
Publicly traded companies have a chance to raise their capitals or
funds through selling their securities to the general public. It
means that compared to a private owned company, it has more potential
of growing. But before a private owned company decides to go public
here are some of the important facts that should be considered.
Who - Not all businesses can just decide to g public because if
it does not have the potential to demonstrate potential for future growth then it is not worth it because
it will eventually get drop.
What – Initial public offering or IPO is the first process to take
when a company decides to go public. In this process, the equity will be sold to with the help of investment
banking firm. The shares will be then traded to the stock market in the form of common stock.
When – Most successful public companies have annual growth potential of at
least 20%. If your business happens to have a close potential considering the established statistics of your company,
then you might take it to the next level.
Where – Investment banking firms are the ones who conduct the initial public
offerings. Before taking your business to the public, make sure to find a reputable investment firm and actually has
an experience with the process.
Why – Balance the advantages and disadvantages why you are taking your business to the public.
There are various reasons why private companies go public and this is one of the most important facts to consider before deciding.
Focusing on the Benefits of Going Public
The basic reason why businesses go public is
the potential if raising the capital. Potential growth is actually easier
and faster with public companies. This mostly attracts many businessmen but
here are some of the benefits if you go public.
Capital markets can be directly accessed and
additional funds are likely to increase.
Reputation is another reason and it also means
profit and more potential for growth.
You can get the most prominent employees in the
industry since you can offer lots of benefits and incentives.
Existing debt can be paid with the increased capital.
It can also be used to fund researches for further venture.
The market share of the company will also likely to increase.
Public awareness of the company will be increased
and potential customers will also increase since it is publicly owned.
Compared to selling some stocks to venture capitalists,
the management of the company still has a chance to retain its control over the
company. Selling common stocks to venture capitalists might require the management
to put them as one of the members of the board.
Going public also means a well established company.
When it comes to interest rates negotiation with the banks, public owned companies
stand a better chance of getting less.
Capital cost will be likely reduced.
Maybe it is not a very big deal for others but for
some, but as the owner of the private company that goes public, becoming a director
will likely affect your standing in the society.
Owning a business privately needs a lot of patience
and determination. All the glory will be all yours but the growth potential is
very low unless you are one of the richest men on Earth. There are many reasons
why take your business to the public and increase you capital more than you could
imagine. But before you do that, you still need make some precautionary measures
to ensure the success of your business.
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