Should My Company “Go Public”?
Companies go public for a number of reasons, and these reasons can be different for each company. Some of the reasons include:
· To raise capital and potentially broaden opportunities for future access to capital.
· To increase liquidity for a company’s stock, which may allow owners and employees to sell stock more easily.
· To acquire other businesses with the public company’s stock.
· To attract and compensate employees with public company stock and stock-options.
· To create publicity, brand awareness, or prestige for a company.
Before deciding to become a public company, there are important factors to consider:
· Your company’s public offering will take time and money to accomplish.
· Your company will take on significant new obligations, such as filing SEC reports and keeping shareholders and the market informed about the company's business operations, financial condition, and management, which will take a significant amount of time for your company’s management and result in additional costs.
· Your company and you may be liable if these new legal obligations are not satisfied.
· You may lose some flexibility in managing your company's affairs, particularly when public shareholders must approve your company’s actions.
· Information about your company, such as financial statements and disclosures about material contracts, customers and suppliers, will become available to the general public (including your competitors).