There are a countless number of questions to be answered when weighing the option to go public. Our team truly believes that all companies must evaluate their position currently and identify the potential for success when entering the public market. Several examples of why you should go public are listed and discussed below. Be sure to also visit our Pros and Cons page so that you can value both sides of a transition to the public market.
Access to Capital:
Being a publically trading company gives you access to various additional forms of individual qualified investors and private/public lenders to your company. Having a stock trading in the public market provides an extra liquid asset as well as another third party valuation mechanism for you to use when obtaining lending. Investors also tend to be more open to equity investments when you have shares that trade on the open market.
Liquidity of Equity:
Another way to raise funds while public is to release shares to the open market. Sale of securities to the open market can dilute and/or decrease the price per share (PPS) of your company. However, if your company is expanding and you are able to keep the demand high, then this is a feasible way to raise you funds and capital.
Access to Acquisitions and Mergers:
Whether you self file or merge into a shell, the addition of shares to your repertoire of enticing options for other companies can prove very valuable. When you merge with and/or acquire companies you are now able to entice them to take equity into your public company. The addition of shares to the transaction structure allows you to better hedge your cost in any major acquisition. This eliminates the initial cost outlay and allows you to continue operations throughout a merger/acquisition without any capital cutback.
Fair Value:
As much as the market catches a bad rap for its volatility, over time the market establishes a channel of fair value of your stock. The public and institutional sentiment is one of the most fair and un-biased third party valuations out there. This is beneficial when speaking in talks with lenders, potential merger candidates and hedging acquisitions. Learn how to better value your company and get the message out to the public.
Public Notoriety:
This is no media or press method that can compete with the online blogs and traditional word of mouth associated with the public markets. Once your stock is public, your company’s news is viewed by millions of investors, hundreds of thousands of capital funds and tens of thousands of professional media outlets. The public market will know who you are, investors will know who you are and so will the massive general public. This gives you the public image and widespread distribution of your information throughout the masses of the investor and public realm.
Legitimacy & Legacy:
One of the biggest and most overlooked reasons “Why to Go Public” is the legacy and legitimacy which you immediately undertake. The public markets keep you updated in your reporting, your financials, your operations and your accountability to shareholders. This transparent view into your company instils a sense of legitimacy to your business that may not always be there. The fact that the public can view the successes of your company today and into the future vouches for your credibility. It also ensures that you and your company will be remembered for the reputation you hold today and the mark you make on the future.
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