What is Initial Public Offering (IPO)?
Initial Public Offering is the first time when a company goes public and offers its shares for sale. The main aim for a company to issue an IPO is to raise capital for its business. The companies that issue an IPO become PTCs – for Publicly Traded Companies.
Should I Issue an IPO with my Company?
IPO is worth taking under consideration when you meet the following main criteria:
- You’re not afraid of the unstable nature of the stock exchange and its aspect of unpredictability,
- The idea of an IPO is consistent with the strategy of company and you accept its rules.
The Pros of an IPO
- The stock allows you to raise funds,
- An IPO gives you the possibility to quickly become a millionaire (or even billionaire),
- If you go through the process of issuing an IPO with impressive results, your company will surely be treated with appreciation and well-deserved respect,
- Your company will be perceived as more prestigious.
The Cons of an IPO
You need to invest time and money (and sometimes – very significant amounts of them.) The former will never be reclaimed, but you will surely broaden your experience in many areas and obtain some new skills, which can be used in various situations in the future. The latter can be treated as a kind of investment, but there is no guarantee of an instant and lucrative success.
Issuing an IPO is a turning point for every company. It will undoubtedly cost it a lot of engagement, time and effort to join an exclusive group of the successful PTCs; therefore, the idea should be at least considered. To sum it up, let’s take a look at the example of a prosperous PTC. In December 1980, Apple offered its shares on the stock exchange as a part of their IPO. There were 4.6 million shares and each one cost $22. The main shareholder, Steve Jobs, made USD$217 million. An IPO can be definitely a unique chance for a certain group of companies to make a promising start in the future.