You are taking your company public. Congratulations!
Not so fast.
This traditional marker of business success is not for everyone, and you may want to think it through before embarking on the initial public offer process.
We can help you do that. There are benefits and drawbacks to taking your business public, and we are here to guide you through them all.
Keep reading to get the information you need to decide “yes” or “no” on IPO.
Pros of the Initial Public Offer Process
The pros of the initial public offer process are numerous. It’s an expression of confidence in your company and the culmination of the long beginning of starting a business.
We are only touching the tip of the iceberg with the benefits we are highlighting here. If you want to stoke your excitement, read on.
Reaping the Rewards of Hard Work
Company founders often put in years of work before they take their company public. Rewarding themselves and the initial investors who funded the company with stock options can make all that work worth it, especially if the stock soars.
Acquiring Capital
You do not launch an IPO just for the sake of doing so. Ultimately, the purpose is to grow your business in ways you could not without an IPO. The IPO gives you the financial freedom to do this thanks to the capital that comes from going public.
Attracting Top-Tier Talent
Companies need every competitive edge they can get when it comes to attracting qualified candidates to their teams. A generous compensation package is an excellent bargaining chip.
When you have thriving stock, offering prospective employees shares in your company can be the deciding factor in their decision to choose you over your competitors. You can also use shares to reward the talented employees who stuck with you from the beginning.
Cons of the Initial Public Offer Process
There are real negatives to going public as well. Not to dissuade you, but simply to help you make an informed decision, we present them to you now.
Not Reaping the Rewards of Hard Work
There is a flip side to every benefit of the IPO process, it seems.
Company founders may not be able to take shares for themselves in their own company in the early goings. If they do, they may not be able to sell them for years. This is because of the lack of confidence in the company this might show early investors.
The Cost of Doing Business Publicly
Going public is not cheap. It is not just the cost of the IPO process that is expensive. You have to also keep up with legal fees and financial reporting in perpetuity, and these services cost money the company must pay.
It is important you learn more about these costs before you jump right into the IPO process.
Intense Regulation
Once you are on the open market, you are accountable to your shareholders. You are under the microscope of the Securities and Exchange Commission, and you must abide by the Sarbanes-Oxley Act, which prevents corporate fraud.
These are ultimately trust-gaining measures, but they do mean more pressure in the workplace than when your company operated on its own private island of commerce.
How to Boldly Go with Your IPO
The initial public offer process is tricky to navigate, and it is not for every company. If you succeed with it, the rewards are great. But the risks of failure are high.
Whatever you decide, you now have more information to guide your decision.
Whether you are going public or not, your business can grow. Check out our powerful suggestions to grow your business now.
