Advantages of Going Public
Whether going public direct through a Registration Statement or going public by Reverse Merger, the advantages of going public to a private Company going public are numerous.
Four Advantages of Going Public
Mergers & Acquisitions
Public Companies may use shares of their stock as opposed to cash for acquiring other Companies. Upon going public and establishing an attractive share price, Company stock can become as valuable as cash. A public Company has more power to grow than a private Company that may only have their cash reserves to rely upon. A successful public Company may also experience an enhanced profile, the benefit of perceived competitiveness and increased stability. This perception alone can generate valuable business relationships that may otherwise have never occurred and is one of the top advantages of going public.
Primary Capital Access
Upon going public a Company may undertake a variety of public stock offerings to suit virtually any financial need they may have. Public offerings can range from $500,000 to in excess of $1 billion and can be tailored to generate a valuable cash infusion for even the smallest public companies. In summary, public Companies have greater financing options than do private companies of the same size.
Secondary Capital Access
Public Companies do not merely have access to capital simultaneously with going public. Upon operating as a public Company for a period of time they may raise additional capital through a myriad of secondary public financing strategies. As the public Company grows they may increase the size of their public offering to meet their current financial needs. Simply stated, they may go back to the public market on multiple occasions to raise additional equity.
Ability to Attract Superior Personnel
Public Companies have a major advantage over their private counterparts in the respect that they may use stock compensation plans to attract and retain key personnel. Professionals are more motivated and maintain higher production standards when they are vested in the Company that employs them. Stock and stock option plans have proven to be some of the most effective devices to reduce employee turnover and increase employee satisfaction. Loyalty, morals and overall enthusiasm increase all because of a Public Company's ability to incentivize key personnel with stock ownership.
Generally speaking, Public Companies are awarded higher valuations than private companies of the same size.
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