The advantages and benefits of being a Public Company!
Access to Capital: Listing your company’s shares for trading on a public market creates liquidity that potential investors will welcome making it easier for you to raise money.
Increase Equity Proactively: The current economic climate has caused the banking community to tighten working capital availability and in many cases have reduced existing credit lines thereby creating a hardship for business owners.
Limit Exposure to Current Lenders: Listing on a Stock Exchange through CBD Financial Group positions your company to begin increasing working capital within 60 days. This added equity will limit or eliminate the risk your company could face from your current Bankers lending practices.
Mergers and Acquisitions: Publicly traded shares creates a new currency that can be used as payment in full or in part when negotiating with an acquisition the value of which can simply be determined by the current market value.
Compensation for your Employees: You will gain a competitive advantage in attracting highly qualified employees by offering them stock in your company. Providing ownership through profit sharing or incentive based employment agreements will also help you retain key personnel.
Ownership as an Incentive to Work Harder: The liquidity of public stock allows your employees to reap greater rewards. They will become a real part of your company instead of just working from pay check to pay check. By making them part owners you are sharing with them your drive to make your company the best it can be. This employee incentive results in improved production, better customer service and greater success for your business.
Prestige: If you are worried about the appearance of your company, or its overall public appeal, when you take your company public, it can provide an air of not only legitimacy, but also stability. Public perception of your company is key in having the resources and abilities to expand your company. The prestige of your company will also reflect on you as the owner. Typically, founders, co-founders and managers of public companies are regarded as having a level of prestige.
Increased Valuation: Public Company valuations can be as much as 6 times greater than those of similar privately held companies. The reasons are many but certainly liquidity and the easier access to capital are two of the main drivers.
In a recent study conducted by the United States Chamber of Commerce, it was revealed that when owners of private companies sell their companies they receive on average 4 to 6 times their net earnings. Owners of public companies sold their companies at an average of 25 times their net earnings.