08
/Décembre 2015
Six Advantages of Going Public
6 Advantages of going public
This status provides many advantages:
- Access to capital and future financing opportunities:
The stock exchange provides an alternative source of financing for deploying its strategy, making external growth operations or making investments. This reason is often the first motivation to be a listed company. In addition, “issuers often receive more favourable lending terms when borrowing from financial institutions.”[1]TSX and TSX-V is the 7th largest exchange group in the world “with a 2.4$ trillion in market capitalization”[2]. - Increase visibility and prestige:
The stock exchange constrain companies to more clarity. Firms have to do periodic publication of their results and accuracy on their strategy. Going public allows to put forward the firm and be known for a wider audience through media coverage. The more it became known, the more people can see the potential, the expertise and the business skills of the company. - Liquidity for shareholders:
Company listed on TMX “attract domestic and international investors: 1.2$ trillion and over 114 billion shares were traded in 2013”[3]. “Greater liquidity in the public market can lead to better valuation for shares than would be seen through privates transaction.”[4] - Gain Credibility:
For many CEO, being public means they will acquire greater credibility. - Facilitate growth:
Public companies can us their shares as a currency substitute to acquire target companies instead of direct cash offering, that methods can be a tax-efficient and cost efficient. - Create employee incentive mechanisms:
“Your employees can participate in the ownership of your company and benefit from being shareholders. Stock options and employee share purchase programs are good mechanisms for compensating your employees without depleting cash reserves. This can serve to ensure stronger employee commitment to your company’s performance and success. Stock options in a public company have an immediate and tangible value to employees, and can be used as a recruitment incentive.”[5]
