Advantages and Disadvantages of Going Public - Essay Example

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Advantages and Disadvantages of Going Public

Advantages for an organization for going public Although going public is an expensive process but there are several advantages. Some of the most important advantages for going public are as follows: More capital can be raised by a company if it starts floating its share in the market. By floating shares in the market, company can have a better growth rate. People know and recognize more about companies whose shares are in the market rather than firms that are privately owned. Going public is a way to brand and market the company as well. It also builds the brand image of the company and the company becomes more reliable and trustworthy (Glueck , 1980). Because of being a better and more renowned company, a public company is able to attract and retain better human resource which helps in improving productivity level of the company. While acquisitions, shares of the company can be used instead of cash. Debt to equity ratio of the company improves because of going public as the capital raised is included in the equity section rather than liabilities. Debt to equity ratio is one of the ways lenders analyze and assess the risk of the company and it explains the amount of debt the company has in comparison to its liabilities. ...Show more

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Going public in business basically means that an organization would start selling its shares in the market and as the company sells its shares, the status of the company changes from privately held company to a publicly owned organization…
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