In the case of an ‘us’ versus ‘them’ for a company, it's all about ‘public’ versus ‘private’. That is, deciding whether to go public, or stay private.
An Initial Public Offering, also simply known as an IPO, is the first instance in which a company issues the sale of its stock to the general public. Prior to this, the company in question is considered private with a core number of shareholders comprising of founders, their families and friends, as well as a handful of professional investors like angel investors and venture capitalists. In this situation, the company is not obliged to sell any of its shares to external buyers even if they are approached and made an offer.
However, when a company “goes public” through an IPO, it becomes available to everyone – from interested individuals to institutional investors, and anyone in between. At this point, the originally-private company will invite the public to invest in and purchase its stock, and will sell at least a fraction of its shares for trading on a stock exchange.
The benefitsPrimarily, the benefit of an IPO is money. Lots of it. An IPO gives a company the motivation and chance to rein in plenty of monetary investment from the public with the expectation that it will be used to grow and expand exponentially. Of course there are numerous methods through which to raise capital, for example through borrowing, acquisitions or further external funding, but IPOs by far have the greatest chance of bringing in the largest sums of cash.
The downsidesWhile the prestige aspect and the large cash influx may be alluring, there are some drawbacks to IPOs, which you should also consider. Most significantly is the requirement to disclose all private financial, tax, accounting and business information to the public. Essentially, where a company decides to go public, the amount of privacy it previously enjoyed from suppliers and competitors is likely to be stripped away.
So is an IPO on the cards for you?The decision is entirely subjective. A company must evaluate and dissect its individual economic situation and brand reputation before entertaining the possibility of pursuing an IPO. There are certainly exceptional monetary benefits to be gained, but you must keep in mind that the financial stakes are high, and it is best to make a calculated decision before proceeding.
Provides an extensive range of manned and electrical security solutions, including manned dog patrols and CCTV installation. Established for nearly 20 years. Utilises an in-house 24-hour control room for monitoring and response. Offers invited.
Viewing: Anytime In Normal Office Business Hours. Closing From 12 Noon Thursday 20th June.
Project Lake carries out contracting services for soil and water erosion control and ecological restoration projects, also supplying some of its own products into these projects at a healthy profit margin. Project Lake has four distinct areas of rev...
Sign up to receive our acquisition alert emails to get your FREE guide
Business Sale Report is your complete solution to finding great acquisition opportunities.
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources