Is it time to take your private company public?
To determine if it’s even time to consider going public, you need to ask two questions. Do you have the critical mass to maintain a public venture? Why do you want to bring the public into your business?
First, being a public company is costly. You will have legal compliance fees, accounting fees, and administrative businesses. The U.S. Securities and Exchange Commission requires filing, maintenance, and record-keeping. When your company is at the point where compliance and other costs required of a public company are small compared to the investor benefits you will receive from being public, then it may be time to start looking at going public.
Second, just because you can afford to go public doesn’t mean you should. Usually, a company goes public for liquidity. You will bring in a much broader and more diversified set of shareholders. You will want to get your company traded on a senior stock exchange, like NYSE or NASDAQ, to provide liquidity and allow investors to trade their shares. That, ultimately, should lead to an increased value per share. Do you have a need and a plan for the capital or liquidity you may gain from being traded publicly?
It is time to go public only when your operation is successful enough, and the financial impetus is strong enough. What’s your experience? Have you wrestled with when to take your company public? What did you do? Join us in the comments below.
Each case is unique. Past results do not guarantee future outcomes. This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. FreeImages Photographer Abdulhamid AlFadhly.
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