Practical guide to going public
If your business is expanding rapidly, has plans to develop into a national / global business and is seeking significant capital to fund this growth, then accessing capital through the public stock markets may be an option for you.
Becoming a public company will:
- help attract new investors and provide ongoing access to capital;
- enhance your company's reputation and ability to attract customers, suppliers and employees;
- provide a mechanism to allow your employees to take part in the success of your company.
This guide provides practical information on 'How to go public'.
Public listing: benefits and considerations
- Access to capital on a continuing basis – in the form of equity investment (shares) as well as other complementary sources of finance;
- Increased visibility and profile with customers and suppliers, which will in turn help to access markets for your business;
- Eligibility for inclusion in indexes;
- Diversification of investor base;
- Potential exit opportunity for owners;
- Create a market for your company's shares, which may allow investors and employees to buy and sell shares and participate in the company's success;
- Acquire other businesses, using your company's shares as an alternative to cash;
- Attract and reward employees with shares or stock options;
- Have a real time objective valuation of your business.
- Financial and time costs of going and remaining public;
- Your company's share price may be affected by factors beyond its control including market sentiment, economic conditions or developments in its business sector;
- External investors that provide capital to your business will expect the business to deliver value through dividends and share price growth;
- As a public company, your business, its performance and its directors will be subject to increased scrutiny. You will need to:
- produce and publish regular financial results reports (at least annually and half yearly);
- disclose information on new developments in your business, whether positive or negative. This may concern:
- your business operations (contracts, customers, suppliers);
- financial conditions (turnover, liquidity, payments, funding etc.);
- management (background and terms and conditions including pay etc.).
- You should develop an investor relations strategy to maximise the benefits of being a public company and to maintain investor interest;
- You may lose some flexibility in managing your company's affairs, particularly when shareholders need to approve some of your company's actions before they can be implemented.