Capital
to Sustain Growth
- Perhaps the greatest benefit is the net proceeds from a public
offering. The proceeds, also known as equity or capital, is unique in
that it does not have to be repaid. This capital can be used to grow
your business and to execute your business plan. You can use this money
to repay debts, carry out research and development, modernize your
facilities, and use it for working capital.
Increased Prestige & Creditability
- Being a public company immediately increases the shareholders and the
Company's image and reputation. Owners often comment to us after going
public, that they find that they have much more creditability. Others
have said that they have found it easier to expand their businesses
regionally / nationally partly due to the increased visibility and
public awareness that accompanies the IPO.
Exit Strategy for Shareholders - As a public company, the shareholders of the
Company can sell some of their shares thereby providing an exit strategy
or liquidity for them. Of course there are certain regulatory
restrictions and market limitations that must be allowed for.
Merger
& Acquisition Strategies
- Companies traditionally grow internally. To speed growth and success,
companies often adopt a merger & acquisition strategy. Unfortunately,
most private companies often lack the resources to carry out such a
strategy. As a public company, you have a significant opportunity to
implement such a strategy. Using a combination of cash and your publicly
traded stock as currency you now have the resources to acquire other
companies. This will allow you to immediately diversify your product
lines, acquire complimentary or better technologies, increase your
market shares, acquire established marketing channels and management
talent, and possibly eliminate a competitor.
Increased
Market Value
- Publicly listed companies tend to attract a much higher value than
comparable private companies. The main reasons are (1) investors are
more willing to pay more for a stock that is marketable (liquid); (2)
public companies tend to be more mature and sophisticated and (3)
information about public companies is easily accessible. Public
companies must publish their results and inform the public of any
material changes on a timely basis.
Incentives for Key Employees - You have an exciting company or
technology with potential for significant success, using stock options
to attract and keep the best people to help you execute your business
plan is important and a valuable incentive available to public
companies.
Easier
Access to the Capital Markets
- Public companies have an easier time accessing additional capital
assuming they achieved their milestones and their stock performs well in
the aftermarket.
Less
Dilution - Often public companies enjoy higher valuations than
private companies and as a result suffer less dilution when shares have
to be sold to raise capital.