An initial public offering (IPO) refers to the process of offering shares of a private company to the public in a new stock issuance. It also known as "going public," an IPO transforms a business from a privately owned and operated entity into one that is owned by public stockholders. Public share issuance allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes share premiums for current private investors. Meanwhile, it also allows public investors to participate in the offering.
Being public brings prestige and visibility with all the players in the market—customers, suppliers, employers, and the financial community. Advantage of going public are:
- Tax Benefit
- Better Corporate Governance
- Brand Value Creation
- Marketability of Shares & Value Determination
- Attract Foreign Investment
- Self Esteem & Social Recognition
- Further Capital Raising Option
- Reduced Reliance on Debt Finance
Overall, going public is an enormous undertaking and the decision to go public requires careful consideration and planning. Experts recommend that business owners consider all the alternatives first (such as securing venture capital, forming a limited partnership or joint venture, or selling shares through private placement), examine their current and future capital needs, and be aware of how an IPO will affect the availability of future financing.
Going through IPO is a long process for a company. Many more internal compliance need to fulfill. By Feasibility Study of IPO, SFCS provides various type of advisory services for any local or foreign private companies to fulfill the overall internal compliance before to going to the public market.