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Access to finance

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

a. Benefits

  • 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.

 

b. Considerations

  • 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.

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