Advantages of IPOs
The primary benefit of going public via an IPO is the ability to raise capital quickly by reaching a large number of investors.
A company can then use that cash to further the business, be it in the form of research, infrastructure, or expansion.
Is going public good for a company?
Going public has considerable benefits: A value for securities can be established. Increased access to capital-raising opportunities (both public and private financings) and expansion of investor base. Liquidity for investors is enhanced since securities can be traded through a public market.
Why would a company want to go public?
The main reason companies decide to go public, however, is to raise money – a lot of money – and spread the risk of ownership among a large group of shareholders. One of the biggest advantages for a company to have its shares publicly traded is having their stock listed on a stock exchange.
What are the disadvantages of a company going public?
- The Process Can Be Expensive. Going public is an expensive, time-consuming process.
- Pay Attention to Equity Dilution.
- Loss of Management Control.
- Increased Regulatory Oversight.
- Enhanced Reporting Requirements.
- Increased Liability is Possible.
How much does a company have to be worth to go public?
For public investors, the rule of thumb for scale is around $100 million in revenue. There are exceptions of course; this number is more of a desired threshold than a clear line. It gives investors a sense of comfort around the number of years it’ll take for the company to actually attain $1 billion in revenue.