Benefits: The Company

Public Companies are Generally Worth more than Privately Held Companies. In many cases, the difference is quite substantial. When you take your company public, you will see an almost immediate increase in the Company’s value and growth potential.

Some of the benefits for the Company:

Access to Capital. Taking your company public will provide potential investors a feeling of confidence in your company, which will be translated into the ability for you to raise money.

Mergers and Acquisitions. If you have been interested in merging or purchasing another company, you can also benefit from taking your company public. The stock that is sold in your company may be worth as much as cash to another company. If you do decide to attempt a merger or acquisition using your stock, you will be able to use the current market value of your stock when performing the transaction.

Compensation for your Employees. You cannot overlook the benefits that you can reap by attracting highly qualified employees by offering them stock in your company. This can also be a reason that these people decide to stay with your company especially if your industry has a high turnover rate. This can make the difference in retaining your key employees.

Attract High-Level Executives. You can also use this option to attract high-level executives for your company. While you can offer stock in a private company to potential employees, publicly traded stock is usually more valuable and desirable to your future executives.

Gives your Employees the Incentive to Work Harder. The liquidity of public stock allows your employees to reap greater rewards. They will feel as if they are a real part of your company instead of a mindless drone pulling in a regular paycheque. By making them part owners with you, you are sharing with them your drive to make your company the best it can be. The incentive to work harder to make the company better is instantly rewarded when the stock price goes up. This incentive ties in your employee’s future with the success of their company.

Prestige. If you are worried about the appearance of your company, or its overall public appeal, when you take your company public, it can provide an air of not only legitimacy, but also stability. Public perception of your company is key in having the resources and abilities to expand your company. The prestige of your company will also reflect on you as the owner. Typically, founders, co-founders and managers of public companies are regarded as having a level of prestige.