CHAPTER NINE: Part A – Taking your company public is another strategy you can adopt to raise funds for your business. However, this strategy is not suitable for generating seed capital; as only existing and growing companies can go public due to the stringent rules and government scrutiny.
So, if you already have a healthy, thriving business and you are planning to expand it, you can generate the needed funds by taking your company public. In this chapter, you will learn all you need to know about this strategy, and you will be able to figure out if your business is ripe for it. Some of the things you will learn in this chapter are:
- How to know if “Going Public” will be good for your company
- The advantages and disadvantages of taking a company public
- The exact steps involved with raising funds via an IPO
- The team you will need to achieve your goal of becoming a listed company
P.S: You may skip this chapter if what you are looking for are ways to raise seed capital for a new business. But it doesn’t hurt to have the knowledge, as you may need to take your public sometimes in the future.
What Does it Mean to Take a company public?
Taking a company “public” simply means transforming a privately owned company into a public entity by selling its shares to the public. This first-time sales of equity securities to the public is called the initial public offering (IPO). Going public helps companies raise expansion capital and become publicly traded enterprises. It also helps them pay off debts or monetize the investment of angel investors and venture capitalists.
After an initial public offering, a company changes from being a closely held entity with a handful of shareholders to a company with a large number of holders of its stock, which can be easily bought or sold through a stock exchange.
IPO versus private placements: What’s the Difference?
Though they appear similar, initial public offerings and private placements are technically different. While an IPO is the initial sales of shares to the public, a private placement is the sale of shares to a limited number of qualified private investors selected based on certain criteria.
In other words, anyone can purchase shares offered for sale during an IPO. But private placements are offered only to institutional investors and accredited individuals (rich investors) and entities that meet certain eligibility requirements.
Unlike IPOs, private placements are generally not subject to public disclosure obligations and are exempt from registration with the securities exchange.
As an alternative to IPOs, private placements provide a quicker infusion of cash and are less expensive. In addition, private companies—unlike IPOs—allow a great deal of control over the whole process; the company can decide who how much to sell, and to whom.
10 Notable Investment Banks in the United states
- Goldman Sachs & Co.
- J.P. Morgan Chase
- Morgan Stanley
- Credit Suisse
- Bank of America/Merrill Lynch
- Deutsche Bank
- Barclays Capital
10+ Notable Investment Banks in Nigeria
- Apel Assets and Trust, Lagos.
- ICMG Securities Limited, Lagos.
- BGL Securities Limited, Lagos.
- Vetiva Capital Management Limited, Lagos.
- Cardinal Stone Partners, Lagos.
- Hasal Microfinance Bank, Abuja.
- PHB Asset Management Limited, Lagos.
- Centage Savings and Loans Limited, Lagos.
- CSL Stock Brokers Limited, Lagos.
- IBTC Chartered
- Lead Capital
Although this chapter contains some valuable information about the process of going public, even much more information has been left out due to space and other reasons. If going public is your next step, you will need to consult experts and other resources to learn more about the process.