The advantages of being a public company are many:
1. Liquidity to your investors - helps monitor progress and benefit from it.
2. Improved access to capital which facilitates growth.
3. Greater visibility - helps attract new business and $.
4. Market feedback - from the capital markets can be used for better decision making.
5. Employee incentives - Stock-based compensation allows workers to benefit directly from the company’s growth, contributing to improving performance.
But it comes with some challenges and expectations too:
1. It’s expensive - expect audits, legal, initial and continued listing.
2. More work + regulations - quarterly reporting, shareholder meetings, yearly audits, comply with regulations, changing accounting rules. The investor communications must adhere to disclosure rules and best practices from a changing regulatory environment.
3. Subject to market pressure - stocks tend to move according to their sector, and analysts use every minute detail in their models from where they make buy/sell choices.
4. Subject to media scrutiny.
Public companies are very susceptible to emotional selling, that's a disadvantage. But it could be a positive on the back of a sector rally. Companies need to see if the pros outweigh the risks, including extra expenses, labour and potential market volatility before going public.