Why Are Companies Rushing For An IPO Exit?

Why Are Companies Rushing For An IPO Exit?

Most startups begin with two things: a powerful idea and dream of a big IPO payday. Companies around the world, from Silicon Valley to Sydney’s SUPER Digital Precinct, are usually focused on building a business that will allow them to list on a stock exchange. They view the IPO as both the light at the end of the tunnel and as the ultimate sign of legitimacy for their ideas. But, is an IPO always the right move for your company?

Advantages of an IPO

There are many advantages to an IPO. Getting listed on an exchange such as the ASX, OTC, or AIM does expand the public awareness of the company and does add a sense of legitimacy. An IPO is also a way to reward early employees and investors who often worked hard and stood by the company without much in terms of compensation.

Once a company is listed on a stock exchange it also makes it easier to raise a lot of capital without having to be accountable to a small band of venture capitalists. Many times founders feel that an IPO comes with a certain amount of freedom to grow the company according to their vision.

Downsides of “Going Public”

But, going public through an IPO is not without some negative consequences. Publicly traded companies are subject to more regulations than privately held companies. Many times companies find that while they no longer have to answer to venture capitalists, they still are subject to the influence of large shareholders and stockbrokers.

Having an IPO creates certain duties towards your shareholders.

The process to going public is always a little bit of a gamble. The amount of capital you will raise is always uncertain. Even if you have a strong valuation, events completely unrelated to your company could tank the market the day you decide to go down the IPO path.

If you do not raise the amount of money you were expecting, you could even start a death spiral. Investors could lose confidence, you may have a hard time raising adequate capital to grow, and instead of your IPO launching your company into the stratosphere, it could signal the beginning of the end.

Other Alternatives

Each company and market are unique. An IPO makes a lot of sense for some companies. But, an IPO is not the only option for companies looking to raise capital and take the next steps.

The key is choosing a funding strategy that is in line with your corporate strategy. Before deciding to work towards an IPO, smart founders will consider all of their options and get advice on what course of action will best serve their goals.

Instead of an IPO, some companies may be better off pursuing an alternative strategy for raising capital such as:

  • Private equity
  • Strategic investors
  • Acquisition

While IPOs will continue to be the sexy option for many entrepreneurs, founders of companies who want to make sure their company lives up to their vision and is built to outlast them will carefully look at all of their options before rushing for the IPO exit.

© Saint Gabriel Pty Ltd 2017

28 Comments

  1. folorentorium 9 months ago

    Good write-up, I am normal visitor of one’s site, maintain up the nice operate, and It is going to be a regular visitor for a long time.

  2. Jefferson Crayne 8 months ago

    I’ve learned result-oriented things out of your blog post. One more thing to I have seen is that normally, FSBO sellers will certainly reject you actually. Remember, they will prefer never to use your expert services. But if you actually maintain a gradual, professional connection, offering guide and keeping contact for about four to five weeks, you will usually have the capacity to win an interview. From there, a house listing follows. Thanks

  3. Kelruitte 7 months ago

    Where Can I Get Metformin Online generic cialis Staph Infection Treating With Keflex Free Pharmacy Paypal Accepted

  4. minecraft 7 months ago

    Wow, fantastic blog layout! How long have you been blogging for?

    you made blogging look easy. The overall look of your
    site is excellent, as well as the content!

  5. minecraft 7 months ago

    Fantastic items from you, man. I’ve have in mind your stuff
    previous to and you’re just too excellent. I actually like what
    you’ve acquired right here, really like what you’re stating and the way
    in which through which you are saying it.
    You are making it enjoyable and you still take care of to stay it
    sensible. I can’t wait to learn much more from
    you. This is really a great web site.

  6. Kelruitte 7 months ago

    How Long Does Viagra Last buy viagra online Levitra Pills Online Doxycycline Skin Health On Line

  7. Fastidious answers in return of this issue with real
    arguments and telling everything concerning that.

  8. Greetings, I do think your web site may be having internet browser compatibility problems.
    When I look at your blog in Safari, it looks fine however, when opening in Internet Explorer, it has some overlapping issues.
    I just wanted to give you a quick heads up! Apart from that, great site!

  9. g 6 months ago

    The other day, while I was at work, my cousin stole my iPad and tested to see
    if it can survive a thirty foot drop, just so she can be a youtube sensation. My
    iPad is now broken and she has 83 views. I know this is entirely off topic but I had to share it with someone!

  10. g 6 months ago

    I all the time used to study post in news papers
    but now as I am a user of net therefore from now I am using
    net for articles or reviews, thanks to web.

  11. g 6 months ago

    Hello everyone, it’s my first pay a visit at this website,
    and paragraph is genuinely fruitful for me,
    keep up posting such articles or reviews.

  12. download minecraft 6 months ago

    Hi, i read your blog from time to time and i own a similar one and i was just wondering if you get a lot of spam comments?
    If so how do you protect against it, any plugin or anything you can suggest?
    I get so much lately it’s driving me mad so any support is very much appreciated.

  13. g 6 months ago

    I’m extremely impressed together with your writing skills and also with the layout
    in your weblog. Is this a paid subject or did you
    modify it yourself? Anyway keep up the nice high quality writing, it’s uncommon to see a nice blog like this one nowadays..

  14. Do you mind if I quote a couple of your posts as long as I provide credit
    and sources back to your website? My website is in the very same area of interest as yours and my users would truly benefit from a lot of the information you present here.
    Please let me know if this ok with you. Thanks a lot!

  15. Like!! I blog quite often and I genuinely thank you for your information. The article has truly peaked my interest.

  16. Wonderful website. A lot of useful info here. I am sending it to a few friends ans also sharing in delicious. And of course, thanks for your effort!

  17. What’s up, every time i used to check weblog posts here early in the dawn, for the reason that i
    love to learn more and more.

  18. Kelruitte 4 months ago

    Propecia Y Embarazo No Prescription Amoxicillin buy generic cialis online Pharmacy Cheapest Reviews Amoxicillin Chocolate Left Amoxicillin Out Over Night

  19. Kelruitte 4 months ago

    Super Avana Algondones Pharmacies Propecia Side Effects buy viagra Clozaril Priligy United States

  20. I’ve been exploring for a little bit for any high-quality articles or weblog posts on this kind of area .
    Exploring in Yahoo I finally stumbled upon this website.
    Studying this information So i am satisfied to exhibit
    that I have an incredibly excellent uncanny feeling I came upon exactly what I needed.
    I most indubitably will make certain to do not overlook this site and provides it a
    look regularly. natalielise pof

  21. Kelruitte 4 months ago

    Buying real worldwide isotretinoin best website mastercard viagra Achat Viagra Soft

  22. EllGuetty 3 months ago

    Promethazine In Canada viagra Todo Sobre El Viagra Side Effects Old Cephalexin Viagra Chino

  23. I am really satisfied with this posting that you have given us. This is really nice work done by you. Thank you and looking for more posts.

  24. JaviesryFrese 3 months ago

    Door Repair
    Are you looking for a Toronto & the GTA door service company near you? We are your trusted door and locksmith experts that you can count on. If you have a new door that needs installation or if you have a problem with your door and lock from a break-in, we will fix it on the spot. Our specialist provides a valuable and affordable service to our commercial and residential customers and offers a 1-year industry standard manufacturer warranty on any of our hardware products.

  25. Parbriz Opel 3 months ago

    Hi there are using WordPress for your site platform? I’m new to the blog world but I’m trying to get started and create my own. Do you require any html coding expertise to make your own blog? Any help would be really appreciated!

  26. Thanks so much for the blog.Really looking forward to read more. Really Great.

  27. click now 1 week ago

    Hurrah! At last I got a webpage from where I be
    capable of actually take helpful facts regarding my study and knowledge.

  28. Thanks for every other informative web site. Where else may I get that type of information written in such an ideal approach? I’ve a project that I’m just now working on, and I have been at the glance out for such info.

Leave a reply

Your email address will not be published.