If you’re a successful entrepreneur and own a flourishing small business, there may come a time when you ask yourself, “should I keep my company private or go public?” Unfortunately, deciding to go public isn’t something that you can just do on a whim and if you do decide it’s right for your business, it will require a lot of forethought to pull it off correctly. Not only that, but it will significantly change how the business operates and your role in the whole operation. In this blog, we’ll take a look at the top benefits of going and staying public. And stay tuned for our next blog to learn about some of the benefits of staying private.
One of the most notable benefits of going public is the sudden influx of capital you will see. During an initial public offering (primary offering), your company will sell a set of new shares of company stock. Unlike loans, this influx of capital will not incur any debt and you can use it in any way you see fit as long as it complies with stock prospectus guidelines. This could include things like purchasing equipment, funding future growth, or funding expansion.
Better Potential For Growth
Naturally, with a sudden influx of what’s basically free capital, you’ll have a much higher potential for growth. Another way that your company may see growth is through prestige. When your company is private, you’ll pretty much only be working with customers that you’re marketing to. However, going public means opening your company up to investors. This will not only get more people interested in your company but you’ll generally be perceived as more of a competitive player in the market, rather than a small company with nothing going for them. This is not to say that staying private means not being competitive, but there’s certainly a much greater potential when you go public.
Expanding Your Workforce
Many small businesses struggle with retaining employees. There are a lot of reasons as to why this is, however, small businesses generally don’t provide as good of benefits, salaries, or incentives that keep employees there for the long term. Improved capital gained through a public offering will allow you to bring on a more talented workforce, offer shares of stock as a motivational tool, and improve your employee retention.
Speak With An Investment Banker
When you take initial public offerings for face value, you may wonder why not everyone decides to go public. Although there are a lot of benefits to going public, there are also a lot of situations where it would be unwise to do so. Our investment bankers here at BMI Capital are here for this very reason. We understand how difficult it can be to determine whether an IPO is right for you and that’s why we’re here to help. Give us a call today and we’ll help you consider all your options before committing to either going public or staying private.