How Securities are Issued?

Chapter: 2 How Securities are Issued?

Section: 6 Advantages of going Public

There are a number of advantages for companies to go public and get listed on the market:

 

  • Listed companies can raise relatively large sums of funds either through equity or debt issue.

 

  • Listing provides a ready market place for the shareholders to dispose their shares or acquire more shares as they wish.

 

  • Public companies tend to have higher profile than private companies.

 

  • Provides a ready value for the shares of the company compared to a privately held company.

 

  • Provides an opportunity for employees to also become shareholders.

 

  • Merger and acquisitions are made easier when the company is listed.

 

  • Issuing new capital is relatively easier for a listed corporation.

 

  • Higher bargaining power with financiers compared to a private company.

 

  • A public offering generally nets a higher price for securities than do private placements or other forms of equity financing.

 

  • Going public can serve as the most attractive exit strategy.

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