There are many ways that companies can raise finance from using the owner’s own capital, to bank loans, venture capital (private equity) and equity finance.
In particular, IPOs can be considered as a solution to:
1. Financing growth, when a company approaches a phase of merger or acquisition
2. Increasing competitive capacity through funds raised with the IPO
3. Diversifying financial resources –a good and “healthy mixture” of debt and equity to finance ordinary operations internationalisation or corporate finance transactions.
4. Increasing the negotiation strength with clients and providers
5. Facilitating intergenerational transfer
6. Attracting qualified staff
7. Improving capital liquidity and value transparency
Institutional investors drive their investments in virtuous listed companies, which, in turn, can increase their capital liquidity through immediate access to capital - and can show the real value of their companies at any point – for example in instances of merger or acquisition.
There are also many other benefits for a company to go public, which include, amongst others, raising its profile amongst the financial and investor community and improving employee loyalty and retention.
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