What are the Advantages and Disadvantages of obtaining a Stock Market Quotation?
For the companies looking to raise capital by equity, IPO (Initial Public Offering) is the first step to selling the stake.
Obtaining a quotation and launching an IPO is time-consuming and expensive (eg accountants, solicitors, and brokers fees).
Let's see the Advantages and Disadvantages
By obtaining a Stock Market quotation, the company can raise a large amount of money by selling new shares in a wide market.
A company can use this capital for further research & development (R&D) and pay off existing debt.
Because of IPO, a company can make publicity of their products and get a group of new potential customers.
Once the company gets the quotation, it becomes easy for the company to raise new funds in the future.
An IPO used to generate the exit route for the existing investors. The investors (Like Venture capitalists, Private equity) who invested in unquoted businesses, want to realize their investments after a few years.
One of the most important changes that companies need to acquire is the disclosure of accounts to investors, which may expose the company strategy and confidential figures to the competitors.
After obtaining a quotation, companies need to comply with the regulatory requirements which require a significant cost.
Privately held companies enjoy more independence than public companies.