Why would a small or medium-sized business owner want to take her or his privately held company public and deal with all the rigmarole associated with public status? That is a good question. Here are a few of the major benefits:
Going public gives your company more credibility and prestige with customers, clients, employees, the press and the financial community.
- Being a public company provides the company founders with a long-term exit strategy.
- Being a public company offers more liquidity for the founders and minority shareholders and investors.
- Public companies can easily finance growth through equity capital rather than debt capital because:
- The company stock can be used as currency for mergers and acquisitions;
- Equity is available for an unlimited period of time and can be used without restrictions; and
- Being public increases your company’s awareness and visibility vis-à-vis investors.
- Being public makes it much easier to raise capital and reduces the need for expensive, and often controlling, venture capital financing.
- Public companies are often valued much higher than their private counterparts are.
- Being public gives you more options for raising capital; you can raise capital through both
- Public and private offerings so you have the benefit of access to more sources of capital.