
Article: Publicly Listing a Company, the Advantages & Disadvantages
By Len McDowall, Managing Director of Integral Capital Group
|
|
A company's reasons for deciding to publicly list on the stock exchange often include the ability to get access to the capital markets for financial expansion and acquisitions. They usually have invested many years of plowing back profits and guaranteeing borrowings and rather than sell out, they wish to remain with the company and be part of its future growth.
|
|
Even if your business is suited to floatation, it may not be the right choice for you. There are a number of key advantages and disavantages to weigh up:- |
|
Advantages: |
|
- You get access to new capital to develop the business
|
|
|
|
|
|
|
|
Disadvantages: |
|
- Your business may become vunerable to market fluctuations, which are outside your control.
|
|
|
|
- You may have to give up some management control of the business and ultimately there's a risk that the company could be taken over.
|
- Public companies have to comply with a wide range of additional regulatory requirements and meet accepted standards of corporate governance.
|
- Managers could be distracted from running the business by the demands of the floatation process, and by dealing with investors afterwards.
|
|
It generally takes 6 months to publicly list a company on the stock exchange although the time period can range from 3 months to 2 years. You will need a range of professional advisors to assist with the legal, financial, accounting and valuation aspects of publicly listing plus prospectus preparation, underwriting of shares and assistance with IPO Plans.
|
|
To learn more about the advantages and disadvantages of a public listing, contact your stockbroker or establish a relationship with an investment banking or corporate advisory firm who specializes in these opportunities. There is a lot of free information on the ASX website. Go to www.asx.com.au
|
|
© Len McDowall, Integral Capital Group 21st September, 2007 |
www.integralcapital.com.au |
|
About Len McDowall, Managing Director of Integral Capital Group Pty Ltd |
|
Len McDowall was previously inaugural Chairman and Managing Partner of Bird Cameron Chartered Accountants (now known as RMS Bird Cameron), which employed 1000 people in 50 offices in Australia and Hong Kong. Len, who established Bird Cameron's mergers and acquisitions division, has extensive experience in all facets of financial management with a particular emphasis on structuring and negotiating joint ventures and capital raisings. Len and his partners established the Integral Capital Group in 1990 which specializes in mergers and acquisitions, public floatation's and capital raisings. Len McDowall is an expert in capital and debt raising and has successfully completed hundreds of transactions in these fields.
|
|
Len McDowall is also a respected and active author on the Internet syndicating his informative articles on investment, capital raising, private equity funding, Pre-IPO Opportunities, IPO Plans, Wholesale Investing, Floating your Company on the ASX, and How to Write a Business Plan to raise capital, a 12 part series. Len McDowall has achieved 'Expert Author' status on many author/article sites. Read insightful views on Len McDowall Blog or connect on Len McDowall Linkedin.
|