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.
Solutions are offered on-site or hosted in the cloud, with the company delivering robust and reliable infrastructure environments, upon which its clients and partners can rely. Services include hosting and IT, with a complementary range of products a...
Benefits from a knowledgeable, approachable and loyal workforce, capable of running the business without the shareholders’ input. Operates from leasehold premises. Our clients are offering the business for sale to pursue other, unrelated interests. O...
Provides an extensive range of 900 products, many of which as an exclusive distributor, owing to its strong relationships with suppliers. Operates from leasehold premises based in South England. Offers invited.
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