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Initial Public Offering of Shares—Is it the Best Option for your Corporate Organization?
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Going public or not?
That is one question that pops out of the minds of different corporate directors and executives of growing companies. The consistent growth of their operation translates to revenues. In order to maintain the flow of revenues, different corporate directors and executives must sustain the growth of the company by infusing additional investment.
Securing a corporate loan is a good idea, but undergoing an initial public offering is probably the best idea that corporate directors and executives can arrive into. Why get the company into debt when the company’s assets such as common shares could be used to raise additional capital that will sustain the company’s continuous growth?
IPO or initial public offering is the first or initial sale of a company’s common shares to the public, which is why it is also referred to “going public”. The most convincing reason why many companies are going public is because it is the most convenient and probably the safest way to raise capital that will be used to sustain operational expenditures.
However, there are still some “strings attached” to this process. Though it’s other reasons such as easy access to much needed capital, increased employee compensation and liquidity due to additional funding, prestige, and publicity are compelling, there are still pointers that you must consider when deciding if initial public offering is the right option of for you to take.
Remember what happened to Netscape when it went public in April 1994? They became the prestigious computer application company that rose above its competitor, with its actual market value reaching $1 billion. However, the executives lost control of the company and even the company itself, which resulted to the selling of the company’s interest to America On Line (AOL). Many investors think that they can capitalize from the revenues generated through IPO, and yet what happened is that the company itself suffered.
Before getting into an IPO process, make sure that your company is “sexy enough” for investors. In other words, your marketing ideas (the industry and the products or services that you offer to the public) are extremely popular to the consumer, which makes it very appealing to the investors. That is why IPO is not ideal for starting and not-well known companies because the risk of losing any infused investment due to unpopularity of its marketing ideas is present. Better assess your marketing ideas first before jumping into IPO.
Do you really understand why you are going into public? You must look the revenues that will be generated on IPO as an “emergency fund” and not as a “luxurious fund”. If the company’s present financial bucket could still sustain the growth of the company and the presence of an explosive growth needs to be seen, there is no reason to go in public. It will just create little benefits to the executives as well as to the future shareholders.
Do you have the necessary funds that you will spend when going public? Keep in mind that there are corresponding expenditures in each stage along the process. For instance, you must have a well-established business plan in order to answer the disclosure document questions, which is an essential part in convincing investors with regards to the viability of your IPO. Creating a well-established business plan alone will cost you as much as $20,000.
Is the initial public offering the best option that you can choose? It requires careful assessment and evaluation of various factors. Do not be attracted by fame and publicity—it can easily kill you.
Recent Initial Public Offering News
Cementos Pacasmayo S.A.A. Prices Initial Public Offering and Begins Trading on the New York Stock Exchange
Cementos Pacasmayo S.A.A. today announced the pricing of its initial public offering. The global offering consisted of 20 million American depositary shares .
Read more...Facebook Files Initial Public Offering Papers
Facebook is about to find out how many friends it has. The social networking giant wants to sell shares to the public. It filed papers for an initial public offering Wednesday. With about 800 million users, Facebook is one of the most visible companies in the world. But until now, the financial side of Facebook has remained largely a mystery. For more, Melissa Block talks to NPR's Steve Henn.
Read more...Elon Musk’s SolarCity Said to Prepare Initial Public Offering
SolarCity Corp., the developer of rooftop solar power systems whose chairman is Elon Musk, is preparing to file for an initial public offering, three people with knowledge of the matter said.
Read more...SpaceX Could Go Public In 2013
The CEO of Space Exploration Technologies (SpaceX) is hoping to launch an initial public offering for the California-based space transport company sometime in 2013, according to various media reports Friday. SpaceX Chief Executive and Paypal co-founder Elon Must told Bloomberg's Alan Ohnsman that there was "a good chance" that the company behind the Falcon 9 booster rocket and Dragon spacecraft ...
Read more...Facebook sets initial public offering in US
WASHINGTON, D.C: After a deep slump that soured many investors on tech stocks last year, Facebook is launching its initial public offering (IPO) into a market that looks ready to greet the social networking giant with open arms.
Read more...HomeStreet completes IPO, raising nearly $80M
HomeStreet Bank's parent company finally completed its much postponed initial public offering Friday.
Read more...Facebook files for initial public stock offering
The social networking company has submitted registration documents with the SEC that set a preliminary goal of raising $5 billion. Facebook is expected to be valued at $75 billion to $100 billion. Facebook has filed papers for what's expected to be the largest initial public offering ever to come out of Silicon Valley and one of the largest in U.S. history.
Read more...Internet Security Co Kaspersky Lab Shelves IPO Idea
Russian IT security firm Kaspersky Lab has scrapped its idea to hold an initial public offering, the company's chief financial officer said.
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