Is Going Public Right for You?

rick-tap-110126 copyAt the beginning of a new year, many companies seek ways to grow their businesses. Some companies may be considering going public in 2018. Going public means a company offers its initial public offering, or IPO, by selling its share of stocks to the public. The shares will be listed on a stock exchange. The Security Exchange Commission (SEC) offers valuable information that helps small and large companies go public and learn how security laws will impact their companies.

Taking a company public is a complex process, and companies should consider the rewards and risks beforehand. You will need the advice and help of a business law attorney who can guide you through the complicated procedure.

Going public creates a sense of success and pride for owners of public companies. This new image can increase investing or finance opportunities. Many investors prefer publicly traded companies over private ones. Some investors will not invest in a private firm since the offered stock is not liquid. Investors are looking for opportunities to minimize risk, and publicly traded firms provide a liquid investment that reduces the risk for investors.

During the initial sale of stocks, a firm will gain public exposure. Overall, public companies are more valuable than private ones. However, is going public a right move for your business? Here are some of the benefits of going public:

  • Help with raising capital
  • Opportunity to buy out private shareholders
  • Establish trust with clients, customers or employees
  • Eliminate debt
  • Build potential growth and investment opportunities

While there are many benefits to going public, there are several disadvantages you should be aware of, such as the cost and fees associated with going public. Sensitive information about the firm will be made public by the SEC. Management will lose its independence to act without the input of shareholders. Ongoing reporting to regulatory organizations is required. Your financial statements are regularly audited, and you may lose control of the firm if investors obtain a majority control of the business.

How to Successfully Go Public

A business law attorney can make sure you follow the appropriate measures to take your company public. Some of the steps you should take include:

  • File a registration statement and submit key information to the SEC for review
  • Find an attorney, accountant, underwriter, and other key persons involved in taking a company public
  • Establish your goals and motives for going public
  • Have an independent auditor audit your financial records
  • File required documents to State and National Association of Securities Dealers
  • Distribute prospectus to the prospective investors

For more information about going public, visit the website of the U.S. Securities and Exchange Commission.

Create a Business Strategy and Seek Legal Help

Firms should create a concrete business strategy with realistic expectations and a solid plan for obtaining results in the publicly-traded arena. Taking a company public can be risky, and companies need to honest about their reasons for doing so. Your plan to go public should have a specific purpose that impacts your company and stakeholders.

Companies should fully understand the rewards and risks, the short-term gains, and long-term growth potentials in going public. You should seek the advice of a well-versed business law attorney who can take you through the process, as well as let you know if going public is the right path for you.

(image courtesy of Rick Tap)