Go public in British English
a. (of a private company) to issue shares for subscription by the public.

Not every idea fits every company, we analyse the needs, motivation and requirements of any company and seek to find the best placed market in the right place at the right time.

We work in most major markets and have been involved in transactions globally with a current focus on North America, UK, Europe and the Far East. The route to IPO can provide exceptional value and prospects for any growing company and is in most cases the next logical step for an entrepreneur that wants to take their business to the next level.

Why Go Public?

Access to Capital

A publicly traded company has greater financing alternatives than a private company. A publicly traded company can return to the public markets for additional capital via a bond or convertible bond issue or secondary equity offering. A public status can also provide favorable terms for alternative financing from public and private investors. Additionally, public lenders and suppliers may perceive the company as a safer credit risk, thereby increasing the opportunities for favorable financing terms. Also, a publicly traded company’s stock can be utilized to be used as collateral to secure loans.

Valuation

In general, public companies have a higher valuation than private enterprises. This fact has been proven by many studies to be up to the multiple of five times. In a report in Entrepreneur Magazine, a study was cited that showcased some of the reasons for higher public company valuation. They included market liquidity, profit measurement, capitalization & capital structure, risk profile and differences in operations. This is very important in an exit scenario whereby your company may eventually be acquired by another company.

Liquidity

A publicly traded company has created a market for its stock in which buyers and sellers participate. As such, stock in a public company is much more liquid than private company stock. Being publicly traded may provide a ready outlet for investors, institutions, founders, owners and venture capital funds.

Compensation

It is increasingly common to recruit and compensate executives and employees with a combination of salary and stock. Stock based compensation can be instrumental in attracting and keeping key personnel. An allocation of ownership or division of equity can lead to increased productivity, morale and loyalty. This type of compensation is a way of connecting an employee’s financial future to the company’s success.

Such stock compensation to employees is more desirable if the stock has a public market. Also, certain tax advantages are a consideration when issuing stock to an employee. Generally, capital gains taxes are lower than ordinary income taxes.

Stock in a public company can be issued as a performance based reward or incentive. As such, the public company may be able to lower its operating overhead by compensating employees with cash and a stock option plan.

Prestige

Being publicly traded can help a company gain prestige by creating a perception of stability. A company’s founders, co-founders and managers gain an enormous amount of personal prestige from being associated with a client that goes public. Prestige can be very helpful in recruiting key employees and marketing products and services. This exposure may lead to improved recognition and business operations. Often a company’s suppliers and consumers become shareholders, which may encourage continued or increased business. In this example, a public company could have a large competitive advantage over its private competitors.

Publicity

A publicly traded company may generate prestige, publicity and visibility, which is effective when marketing your company and its products or services. Public companies are more likely to receive the attention of major newspapers, magazines and periodicals than a private enterprise. A successful public listing can get a company’s story out to the world, which may open an opportunity for investors that are not suited for an investment in a private company. Additionally, being publicly traded makes it easier for other companies to notice and evaluate the firm for potential acquisition.

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A publicly traded company tends to have a higher profile than private firms. This may be important in industries where success requires customers and suppliers to make long-term commitments. Indeed, the suppliers’ and customers’ perception of company success is often a self-fulfilling prophecy.

Mergers & Acquisitions

Once a company is public and the market for its stock is established, the company’s stock can be looked at as “currency”. It is sometimes looked at more favorably than cash due to long-term tax implications when acquiring a business. This fact, along with the higher valuation of a public company, can make a key acquisition less expensive than for its private counterparts.

Exit Strategy

One of the important benefits of being a publicly traded company is the fact that when the company’s stock eventually becomes liquid, it may provide an effective exit strategy and financial freedom for its founders and employees. A public market for the stock may also provide a potential exit strategy and liquidity to the investors. Owning a publicly traded stock may enhance the personal net worth of a company’s shareholders.