Debating whether to take your company public (a.k.a. Initial Public Offering or “IPO”) is a huge decision. The fact that you’re debating it at all shows that you highly value your company, and that it’s expanding rapidly. So, congratulations! This is an exciting time for you and your business. But, from thoroughly researching the market and your company’s financials to dealing with new compliance requirements and investors, your business is going to be put through the wringer.
At the Trembly Law Firm, we regularly work with our clients to help them grow and succeed. So, if you’re debating an IPO, please contact us right away! In the meantime, let’s discuss some of the main advantages and disadvantages of going public with your stock.
- Raise capital
One of the main reasons that businesses decide to go public is also one of its biggest advantages. By opening your stock up to the public you are able to raise a lot of capital quickly because it reaches a large number of investors right away. And of course, the company benefits from a large influx of cash in many ways. From funding new research projects and investing further into its infrastructure, there are now numerous options for your company’s continued growth.
- Expand your customer base
When you go public, there is a lot of news and publicity surrounding its IPO day that helps raise awareness even with casual investors. Also, before the big day, there are a lot of requirements your company has to meet in terms of financial evaluations and filings, thus increasing its transparency and trustworthiness in the market. Being transparent, having thorough financial summaries and market evaluations, as well as a competitive stock price shows the public that your company is a good investment they won’t regret making.
- Employee incentives
Another advantage of going public is that you will be able to offer employees additional incentives. Such incentives include stock options and other investment plans. Being able to offer these kinds of perks help to attract the best talent pool, making your company the best that it can be in all areas.
- Costs of compliance
Although the return on investment can be very high, it still takes a lot of resources to actually bring your company to its IPO day. From putting a team of specialists together, to making sure any new state and federal regulations are met, it can get a bit overwhelming. That’s why it’s so important to make sure all of your research and preparation is thorough, so that the investment put in won’t hurt you in the long run.
- Increased scrutiny
Another disadvantage is that by taking your company public, you increase the public’s ability to scrutinize your business. They’ll be able to see financial summaries and projections in order to make a determination as to whether your business is actually a good investment. Although the benefits may still outweigh the negatives, this is definitely something to think about before deciding to go public.
- You only get one shot
Finally, it’s important to make sure that your IPO team is as thorough in its assessment of the market as related to your business and the economic climate, the public’s attitude, and your company’s stability before going public. This is because an IPO can only happen once, so you want to make sure that none of your hard work and preparation goes to waste.
Consult with an experienced business attorney.
Getting your business ready to go public is a massive undertaking. From determining whether it’s a good idea to actually preparing for the date and dealing with the upkeep of a public company, there are too many things to think about for one person. At the Trembly Law Firm, our dedicated team of attorneys knows what it takes to make sure your company’s IPO is a major success. So please, if you’re thinking of growing your business and taking it public, please don’t hesitate to contact us today!