Advantages of IPO - OverviewThe Advantages of IPO is the primary factor for the immense growth of the same in the last few years. The IPO or the initial public offering is a term used to describe the first sale of the shares to the public by any company.
Major Advantages of IPOIPO has a number of advantages.
IPO helps the company to create a public awareness about the company as these public offerings generate publicity by inducing their products to various investors.
- The increase in the capital: An IPO allows a company to raise funds for utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing.
- Liquidity: The shares once traded have an assigned market value and can be resold.
This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price.
- Valuation: The public trading of the shares determines a value for the company and sets a standard.
This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares.
Why do companies bring IPO? Advantages and disadvantages of Public Issues
- Increased wealth: The founders of the companies have an affinity towards IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.