Taking your company public

At some point, many business owners will consider taking their company public. Also referred to as an initial public offering, or IPO, the first time a company sells its stocks to the public can be a profitable and exciting time. But before you take your business public there are a number of things you should keep in mind.

What is required to take my company public?

If you are considering going public, there are a number of things that need to be in place. Keep in mind that your company doesn't need to be huge, nor does it need to be grossing billions of dollars a year in order to be profitable. However, before you go public, your revenues need to be showing a consistent, solid growth.

The process of taking a business public is quite time-consuming. You will use a team of accountants, lawyers, and experts to draw up the right documents and file the proper papers. In addition, you will also have to provide in detail the company's finances, target market, management, and a number of other information. You will also have to find an investment bank to set your offering price and then allocate shares of your new company to other underwriters. You must also register with the Securities and Exchange Commission and market your deal to prospective investors. The entire process can take months to fully complete

What are the risks of going public?

Before you go public, it's also important to be aware of the risks that are involved. Some of them include:



• The entire IPO process.The above paragraph only briefly touched on the process of going public. It is time consuming as well as expensive. Keep in mind as well that the commissions can be up to 9% of the amount raised.


•  High out of pocket expenses. These can run about $500,000 for a $10 million offering. In addition, there is no guarantee that the IPO will recover the costs.


•  Control of company. Another risk of going public is losing control of the company. This can occur if a large portion of your shares are sold.

What are the benefits of going public?

While it may seem like the risks of going public can outweigh the benefits, if done correctly, going public can result in a number of benefits for your company. One of these is more capital. Taking your company public can mean access to a considerable amount of capital. For example, If a company needs to raise capital, it can now sell its stock or issue bonds. In addition, an initial equity offering can bring a company instant proceeds that can be used for a number of things, including growth and expansion, marketing, and development, to name a few.

Other benefits of going public include:

•  More to work with when dealing with investors
•  Increased recognition for your company
•  Better chances of obtaining financing in the future.
•  Improved company image and prestige.
•  Ability to attract and retain more qualified personnel by offering stock options, bonuses, etc.
•  Increased company value if you plan to sell the company.

As you can see, there are many benefits to taking your company public. You should thoroughly research your market and be aware of all potential risks before you start the process of going public. Rating: 0/5 (0 votes cast)

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Categories: IPOs (Initial Public Offerings), Stock Analysis, Stock Market, Stock Splits, Stocks,

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