Advantages of Public Company

1400 Words Sep 14th, 2006 6 Pages
Access to Capital
A public offering of stock can vary from $500,000 to over $1 billion. In 1999, 544 companies completed an IPO(Initial Public Offering). The total capital raised from these offerings was $23.6 billion. By offering stock for sale to the public a company can access a substantial source of corporate funding.
If a company needs to raise capital, it can sell stock(equity) or it can it issue bonds(debt securities). An initial equity offering can bring immediate proceeds to a company. These funds may be used for a variety of purposes including; growth and expansion, retiring existing debt, corporate marketing and development, acquisition capital and corporate diversity.
Once public, a company 's financing alternatives are
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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 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 your company.
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Public firms tend to have higher profiles than private firms. This is important in industries where success requires customers and suppliers to make long-term commitments.
For example, software requires a significant investment in training and no manager wants to buy software from a firm that may not be around for future upgrades, improvements, bug fixes, etc. Indeed, the suppliers ' and customers ' perception of company success is often a self-fulfilling prophecy.
Publicity
A public offering of stock can generate prestige, publicity and visibility, which is effective when marketing your company. Public companies are more likely to receive the attention of major newspapers, magazines and periodicals than a private enterprise.
A strong ad campaign coupled with media initiatives can potentially increase sales and revenue. The publicity received from a public offering encourages new business development
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