When should a Company Initiate IPO?
Creating an initial public offering, by definition, means selling once-privately owned shares to the public. After the offer is made, these shares are traded on a recognized stock exchange.
To create an IPO, start-up companies and small businesses must demonstrate the potential to develop into lucrative enterprises. Larger companies must show an ability to generate profits and increase marketability over time. When considering the pros and cons of making an initial public offering, company owners should begin by making an honest assessment of an organization’s earning capacity.
•To access capital markets to raise money for the expansion of operations
•To acquire other companies with publicly traded stock as the currency
•To attract and retain talented employees
•To diversify and reduce investor holdings
•To provide liquidity for shareholders
•To enhance the company’s reputation
Other reasons may be private and personal. It is important to keep specific goals in mind throughout the going-public process.