Factors for Going Public Through an Ipo
Factors for going public through an IPO
Strengths
When an organization is private they have decisions to make. Going public through an initial public offering, or IPO is one decision they can choose. When going through an IPO there is going to be increased capital. A public offering will allow a company to raise capital to use for various corporate purposes such as working capital, acquisitions, research and development, marketing, and expanding plant and equipment (FindLaw, 2013). Other advantages of choosing an IPO would be liquidity, increased prestige, valuation, and increased wealth.
Weaknesses
Even though going public has some advantages, it can also have some disadvantages too. The time and expense is probably one of the biggest disadvantages with this choice. It can take over a year and much money for fees to even start the process of an IPO. Other disadvantages to going public through an IPO would be disclosure, decisions based on stock price, regulatory review, falling stock price, and vulnerability. Disclosure is another part that can be costly when starting an IPO. That means that the organization has to make all financial records available to the public.
Opportunities
Going public is a way to increase public awareness of the company. The company will have more exposure of its product line. This awareness will increase sales because the product will be introduced to a new group of potential clients. An opportunity to increase clients will have an increase in market share. Investors will have a positive reaction to the company as it increases its market share.
Threats
As a public company, there will be accounting practices that will need to be met. The SEC requires public companies to comply with the regulations. The cost to comply with SEC regulations can be expensive in addition to the regulations the SOX Act will require an external accounting firm to audit the company adding additional cost. Since Lafleur will now be operating as a public
Strengths
When an organization is private they have decisions to make. Going public through an initial public offering, or IPO is one decision they can choose. When going through an IPO there is going to be increased capital. A public offering will allow a company to raise capital to use for various corporate purposes such as working capital, acquisitions, research and development, marketing, and expanding plant and equipment (FindLaw, 2013). Other advantages of choosing an IPO would be liquidity, increased prestige, valuation, and increased wealth.
Weaknesses
Even though going public has some advantages, it can also have some disadvantages too. The time and expense is probably one of the biggest disadvantages with this choice. It can take over a year and much money for fees to even start the process of an IPO. Other disadvantages to going public through an IPO would be disclosure, decisions based on stock price, regulatory review, falling stock price, and vulnerability. Disclosure is another part that can be costly when starting an IPO. That means that the organization has to make all financial records available to the public.
Opportunities
Going public is a way to increase public awareness of the company. The company will have more exposure of its product line. This awareness will increase sales because the product will be introduced to a new group of potential clients. An opportunity to increase clients will have an increase in market share. Investors will have a positive reaction to the company as it increases its market share.
Threats
As a public company, there will be accounting practices that will need to be met. The SEC requires public companies to comply with the regulations. The cost to comply with SEC regulations can be expensive in addition to the regulations the SOX Act will require an external accounting firm to audit the company adding additional cost. Since Lafleur will now be operating as a public