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How Going Public For Facebook Has Affected The Company - Research Paper Example

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How Going Public For Facebook Has Affected The Company

Since that time, it has seen its users numbers grow to over 900 million users who are active. Handset devices are the majorly used by the Facebook subscribers. As typically anticipated, changing a company’s status from a private to a public status happens to be a commemorative period for the commercial entity holder, as well as, the management. The IPO signifies a reward for periods of thriving practices of the Facebook Company and the affirmative reception by the consumers. Nevertheless, the taking of the Facebook Company happened to highlight the significant weaknesses perhaps as an entity that is not geared up to see through the extra burden of finances and consequently lack of control. This is brought about by the initiation into the market of the stock exchange. As is the norm when preparing a company for an IPO issuance, a company cannot put out the information regarding its finances with any prospective investors or present investors through the quiet period. Therefore, investing in the company comes out blindly, a case that could make the investors lose their finances on the takeover supposing the company is overvalued as is the Facebook Company. In the process of making acquisition briefly after the IPO, since the overvaluation result in the unreasonably investors being buoyant, there is bound to be an overpayment. The challenges the Facebook Company has undergone since transforming its status into being a public company have posed numerous challenges to its undertakings. These challenges have consequently had a bearing effect on the company. Introduction The process of acquiring a public status of a trading company dealing in the stock exchange market from a private entity is not a procedure to be assumed lightly. The procedure is rigorous and takes up a lot of the financial resources, the dedication of management and the company’s time. However, the result of transforming into a public entity is significant as it comes along with an increase in the finances together with an increase in the level of awareness by the public. In addition, there is also the increase in the requirements of the legal nature and the corporate responsibility. Facebook Company’s intention of having IPO was essentially become traded in the public domain and consequently become bigger. Therefore, the individuals who put up their finances in the company through purchasing of the shares of the company gain a part of ownership of the company for an opportunity to share in the advantages of the company’s upcoming profits. For the owner of the Facebook Company, part of control he encompasses for the company was given up relative to the percentage of the company put up on sale. On top of being answerable to its shareholders, the Facebook Company has been opened to scrutiny by the government and the public. Nonetheless, the anticipation is that the Facebook Company will be able to generate extra capital resources as its capability to do so have been considerably improved. The general net worth of the company which is necessitated by the selling of the company’s stock, results in the company attaining such capabilities. The thriving of the stock of the company as was expected prior to the IPO was that it would play a part in the decreasing of any ratio of the debt versus the income, consequently assisting in the enhancement of the company’s score on its credit. Therefore, supposing the Facebook Company after attaining the public trading company status had successful stock provision, lenders can subsequently is found easily. This is because of the enhanced rating of credit ...Show more

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The issuance of an IPO consequently transformed the status of the Facebook Company from a private entity to a public company because it became listed on the public stock exchange market…
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How Going Public For Facebook Has Affected The Company essay example
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