Qualities Of A Good Listing Candidate
A good listing candidate will be a business that is in position to derive the benefits from being a “public company”, including:
Access To Capital And Future Financing Opportunities
Going public provides your company with equity financing opportunities to grow your business – from expansion of operations to acquisitions.
The issuance of public shares will expand your investor base, and will help set the stage for secondary equity financings, including private placements. As well, issuers often receive more favorable lending terms when borrowing from financial institutions.
Increased Visibility And Prestige
Going public enhances your company’s visibility. Greater public awareness gained through media coverage, publicly filed documents and coverage of your stock by sector investment analysts can provide your company with greater profile and credibility. Ultimately, this will result in a more diversified group of investors following your company, which may increase demand for your company’s shares and thus increase your company’s value.
Liquidity For Shareholders
Becoming a public company establishes a market for your company’s shares, providing your investors with an efficient and regulated vehicle in which to trade their own shares. Greater liquidity in the public market can lead to better valuation for shares than would be seen through private transactions.
Create Employee Incentive Mechanisms
Your employees can participate in the ownership of your company and benefit from being a shareholder. Stock options and employee share purchase programs are a good mechanism for compensating your employees without depleting cash reserves.
This can serve to ensure stronger employee commitment to your company’s performance and success. Share options in a public company have an immediate and tangible value to employees, especially as a recruitment incentive.
As a public company, your shares can be utilized as an acquisition currency to acquire target companies, instead of a direct cash offering. Using shares for an acquisition can be a tax efficient and cost effective vehicle to finance such a transaction. This can also improve your ability to complete mergers and acquisitions in a more timely and cost-effective manner.
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