When to Go Public
Trusted Houston Corporate and Securities Attorney
Many business owners are unsure of just when to take their companies public.
While it may be easy to assume that going public will translate into mountains
of profits and hordes of capital from outside investors. The reality can
be quite different, which is why you should consult with a Houston securities
attorney when strategizing major changes for your business such as considering
taking your company public.
Our firm works hard to provide businesses the legal resources they need
to stay in-step with state and federal regulations and make the best legal
moves for their company. We bring our over 10 years of experience to each
client we interact with. Attorney Samuel E. Whitley has even been included
in the listing of
Rising Stars for his knowledgeable counsel. Trust Whitley LLP Attorneys at Law to put
your business needs first!
Reasons to Go Public
Choosing if and when to go public is a major decision in the life of any
company, meaning having professional advice is key. This is where our
firm can help.
The goals for any company going public usually include:
- Creating liquidity for existing shareholders and allowing them to sell
stock at a higher valuation
- Creating currency for future acquisitions
- Creating stock-based compensation for employees
- Building legitimacy and credibility among customers, suppliers, and investors
- Raising money in public markets for business expansion
Only the largest of companies make a substantial windfall just after going
public and realistic expectations should be in full view.
In general a company should only go public when it is profitable. Just
how profitable depends in large part on the company and industry, but
if annual profits are under $1 million, it may be wise to hold off on
Precautions to take Seriously
Going public can also mean incurring certain costs such as annual audits,
quarterly reviews of financial statements, and other obligations. Companies
who go public need to have a good accounting system in place, an accountant
or CFO who can create GAAP-compliant financial statements, a report-filing
system with the SEC, and they will need legal counsel to prepare these
yearly and quarterly reports.
All these are good reasons not to go public too early—going public
to raise the necessary funds to pay for the requirements just mentioned
is not a good idea.
Speak with our Houston securities lawyer who can apprise you of what going
public can mean for your business and provide you with the legal advice you need.
Call today to request your consultation—(888) 252-8277!