IPO that abbreviates for Initial Public Offering is one of the ways of a company to fund their new project or raise funds for improvements by offering some shares to the common public. We have heard a lot of many companies go in for it and the stock values and prices go high and high with every passing time, while few of them may fluctuate.
So, why should you subscribe to an IPO? Is it all worth your money and time? Well, read here to know about the good, up and downside of IPO’s.
The first and basic advantage is the company gets fund and enough capital to continue its growth and invest in any other necessities of business. Here is the list of other advantages:
Access to Huge capital:
Any company can’t take loans beyond capability, through its performing great, simply because it may be out of rules and also may be people are not interested. But, by authorizing the IPO, a company gets access to a huge number of potential investors and each one can invest up to their potential.
Rather than depending only on a certain number of people, opening an offering to the large public is always the best idea, and has proved from time to time that it’s the best option to raise big fund.
Stock and Company Value:
By opening an IPO, you give the general public a share or unit in your company holdings and with that, your company stock value to increases. In general, without a company being listed in the market, no one can gain access to the stocks. By opening an IPO, you can reward your employees with these stocks which will improve your value in the market and if you are already performing great, you will see that your IPO listing itself will add more value to existing one.
High Image in the market:
Once a company goes in for IPO, the value of it amongst their clients, customers, and general public goes high. The logic behind is that, when you are listed, you are thoroughly checked by the organization authorizing the markets and gives a strong message to the public that they may rely on the company proceedings and park their investments in the company stock. As more investors seek investment, the stock value to increases, automatically adding value to your company.
Now, let’s see the downside:
- The hefty fee to be paid as a company to be listed in the market.
- IPO listing can go undersubscribed if the public is not aware and underestimate the company.
- May lose some valuable information to the competitors.