Every business owner fears stagnation. When faced with challenges in raising funds and expanding, companies may take the necessary but difficult step of going public to overcome these hurdles. For a company to go public, simply means transitioning from a privately held entity to a publicly traded one. This comes to fruition through an Initial Public Offering (IPO).
Breaking this down to simpler terms, a private company is owned by a small group, including founders, management, and private investors, without trading shares on stock exchanges. It enjoys decision-making flexibility, faces fewer regulations, and avoids public scrutiny.
In contrast, a public company has shares traded openly on stock exchanges, with ownership spread among various shareholders. Public companies adhere to strict regulations, regularly disclose financial information, and undergo public scrutiny. Unlike private entities, shares of public companies can be openly bought and sold, offering liquidity and investment opportunities. Going further in this article, we will be talking about the advantages of a company going public. Advantages of a company going public with an Initial Public Offering (IPO) Financial Injection Financial injection, as a key advantage of a company going public with an Initial Public Offering (IPO), refers to the substantial influx of capital that a company receives by offering its shares to the public for the first time. This process provides the company with a crucial financial boost, enabling funding for expansions, research, and strategic projects, ultimately positioning them to compete with the best in the industry. Liquidity and Visibility
Shareholders, especially early investors, gain the ability to sell their shares as they become tradable assets. Notably, Facebook's 2012 IPO allowed early investors to cash in. Going public also boosts a company's visibility, credibility, and prestige. Tesla's 2010 IPO is a good example; it propelled the electric car company into the limelight and attracted more collaborations. Employee stock options Employee Stock Options (ESOs) not only motivate but also attract and retain top talent, especially when the company is going public. According to Time Stamped Employee stock options may allow workers to buy company stock at a discount, allowing them to effectively “buy in” to the company and increase the amount of equity they have. This may incentivize employees to work harder and more productively since the future value of their holdings will likely depend on how well the company ultimately performs. They’re more invested — literally and figuratively — in the company succeeding. Market valuation
The market decides the current value of the company's shares in real-time, creating transparency that influences investor views positively. This instant and clear valuation gives investors immediate insights into the company's value, building confidence and trust. Additionally, this quick valuation allows the company to adjust rapidly to market changes, attracting investors and efficiently raising capital. Apple had its IPO in 1980 and over the years, its market valuation has soared. In June 2023, Apple became the first company to reach a $3 trillion market cap, showcasing the enduring impact of a transparent valuation process. To sum it up, a company going public comes with advantages such as additional funds for expansion., opportunities for employees, and a clear value in the stock market. This sets companies up for big success.
However, not all companies are ready for all that comes with going public and that is why our Business summit is the best option for raising your expansion project funds. Where you get to engage a closed knitted network of ready investors to tap into your prospect and give life to your ideas. We make funding stress-free and worthwhile. Get your self a seat when you register for our upcoming Investors Summit at Lisbon, Portugal on the 15th of February, 2024.