Pros and Cons of Going Public

Pros

1. Liquidity for founders and the initial investors (Angel, Venture Capitalists etc.): A company with shares can use them as currency to negotiate future mergers or acquisitions. Having shares also helps investors assess the market value of the company with more accuracy.
2. Incentives for employees: Stock options and purchase plans add to an attractive employment package and give employees a vested interest in the performance of the company.
3. Enhanced corporate image: Having stock enhances the reputation of a company and makes it appear more stable and less risky to lenders.
4. Free publicity: Public disclosure, press releases and investor reports provide free publicity for the company.

Cons

1. Paperwork/reporting and complexity: Public ownership means a responsibility to report to the public on finances and other company activities. Reporting, audits and regulatory reports create more paperwork and can be time consuming, while also adding complexity to operations by adding the requirement for internal controls.
2. Loss of competitive edge: Public ownership may mean giving up some trade secrets and other IP. Giving away confidential information might compromise an advantage over competitors
3. Loss of control: Pressure to meet shareholder expectations can create a situation where decision-making is not always in the best interest of long-term growth, if the majority have short-sighted goals for profitability. In addition, going public means reliquishing ownership, control and opening the door for potential takeovers.

Where It Stands

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