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Stuart Wilde

Investment Dictionary


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Go Public

 

Go public means to get company’s shares listed on the stock exchange; the process also called floatation. To go public, company has to hire some investment banking firm that would help to execute an IPO (initial public offering). When company becomes public (which means any person can buy stock of the company) the next goal is to increase company’s value.

 

Most of the large companies sooner or later are going public, and those are the main reasons why they are doing it:

  • Public corporations have better chances to attract more capital. 
  • Getting public will increase the value of the company’s shares.
  • Shares of public companies are more liquid.
  • Higher transparency builds more trust in a company.

 

If company’s owners decide to go public, they should know that there are some disadvantages too:

  • Company’s owners lose a full control of the company (even if they still hold a control stake).
  • Company loses some privacy, and it gets harder to protect business information from competing companies.
  • Company has to hire additional staff that is related to going public (for example, investor relations).
  • Company has to pay fees for the stock exchange, better auditors, market maker if there is a need, and other.
  • Company may be a target of a hostile takeover.

 






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