Why a company would consider going public? What are some of the advantages and disadvantages?
A public offering of stock can help a company gain prestige by creating a perception of stability. A company’s founders, co-founders, and managers gain an enormous amount of personal prestige from being associated with a client that goes public. By selling stock on the US exchange, companies gain additional exposure and become better known. This exposure may lead to improved recognition and business operations. The public status can have leveraged when marketing goods and services. Often a company’s suppliers and consumers become shareholders, which may encourage continued or increased business. In this example, a public company could have a competitive advantage over a private enterprise. An IPO can indicate credibility to a company’s customers, which may lead to increased sales and a greater corporate profile. Once a company goes public, lenders and suppliers may perceive the company as a safer credit risk, enhancing the opportunities for favorable financing terms. Also, a public offering can create publicity that is effective when marketing a company.
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