Initial public offering is generally referred to as the first sale of stock by a company. IPO helps small businesses in very many ways. In this case they are able to expand because they get the capital they need. There are a lot of advantages a company can realize from coming out with IPO. Gaining access to risk capital is one of these advantages. It is always difficult for small businesses to raise capital from big investors. In this case you find that small business ventures dont get a fair evaluation from big investors. This is why it will be advisable to come out with IPO. It will help you get equity from the public. In this case you may actually get someone who values your business more.
Coming out with IPO will be your best choice to increase your public image. This is due to the fact your business will get more recognition from suppliers and customers. You will also be able to attract other companies. You will also find banks who are interested to lend you money. You will find that lenders will be interested in giving you more capital.
You will get more stock options when you come out with IPO. It is possible to issue stock to employees even as a private limited company. The main issue with this is that you are required to follow various laws. Liquidity is also not facilitate by these laws. It will be easy for you to et up employee stock option plans when you list yourself as a public limited company. This will make it easy for you to motivate your employees. Carrying out mergers and acquisitions will be easy for you if you are listed a public limited company. This is because the process becomes simpler for you. The market will now drive the valuations.
Coming out with IPO will help you liquidate some of your holdings. Having access to venture capital in the past will give you the opportunity to venture capitalists. They can liquidate all or part of their holdings too. When you list your company as public, you will get more responsibilities. This means you will be able to gather income from various kinds of works. You will also get the advantage of sharing corporate control when you list yourself as a public entity. This means the operations of the business will not be affected by what the employer wants. All your shareholders will be controlled by a board of directors. In this case the management of the company will be carried out in a transparent manner. The best interests of your shareholders will be the ones to determine these processes. In this case you will have to share all the profits you gain with your shareholders in form of shares and dividends.