Most companies will reach a point where they can’t progress without going public. Going public opens up a new opportunity for funding, and it creates a scenario where industry leaders may be attracted to the board room. However, some companies are better off private. Continue reading to find out when, or if, you should take your company public.
Offering IPOs sounds like a good idea. It brings imagery of people rushing to pick up your stocks before the prices skyrocket, but not every company will benefit this much. Here are a few signs that you should take your company public:
1. You can Accurately Predict Company Profits
An investor may be weary of purchasing stock if you have trouble with your projections. An investor wants to enter into a company that is professionally run and is aware of their earning potential. Do not offer IPOs until you have this covered. You need to have good record keeping ability within the company, showcasing past earnings. This makes it easier for an investor to make a decision.
2. You must have a Solid Team
A company is bound to change board members. In fact, once a company goes public, it may find investors purchasing their way into the board room. Even with this in mind, it is important to have a fully functioning board room before offering IPOs. You need to show potential investors that those at the top of the ladder know what they’re going; you need to show them that the leaders know how to run a company.
Those who work lower down the corporate chain are just as important. A solid financial team is important to any company’s success in the stock market.
3. Have a Reason for Going Public
Don’t simply go public because it seems more profitable. Have a business plan in place for when investors begin to purchase your stock; have a reason for going public in the first place. Perhaps a company plans on using cash earned from IPOs to conduct further research; perhaps the company wants to make mergers & acquisitions easier. There are a number of good reasons for a company to want to go public. As long as the company has a solid plan, it can’t go wrong with opening its doors to new investors.