There are many advantages to operating your business as a public limited company, and for registering your company on the stock exchange, for example, equity capital obtained from an initial public offering is considered a permanent form of capital since there is no interest to be paid on the equity, and it is not repayable like debt; funds generated by a public offering are, therefore, considered a relatively safe form of capital for a business. Going public can also allow a company the freedom and flexibility to spend capital, as it needs to finance its growth and further development, providing a solid financial base on which to build. Equity capital from an initial public offering also allows a company to exploit its market opportunities almost instantaneously while they are present, and before the opportunity is lost as a result of a change in market.
The main advantages of a public limited company are as follows: -
There are many advantages to operating as a public limited company, but, as with all business choices, it is important to be aware of all of the implications before deciding what is right for your business.
Floating your company on the stock market will necessitate a paradigm shift with respect to the management of your business and the responsibilities of its directors. Once the company is listed on an exchange, every action that the company makes will be in the public arena. Your company will need to appease many more people, for example, shareholders, the financial markets, regulators and the financial press.
The following are important points to consider before incorporating a public company: -
A leader of a public company, and their management team, will need to balance business needs with the expectations of the financial markets. A commitment to these new responsibilities must endure beyond the initial flotation: to really prosper on the public markets, directors must recognise that the new management strategies required are permanent, and require a long-term commitment.