Pros & Cons Of Going Public

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.

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