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What are the benefits of going public?

Everyone who starts a company has dreams of success, but many don't fully understand the numerous steps that are involved in that process. Some business owners want to keep their company private, and in reality, there are a few advantages that some businesses gain by doing this. After all, there has to be a reason that companies like IKEA and Domino's Pizza have remained private. For many companies, however, the benefits of selling stock in an initial public offering far outweigh the possible benefits of not doing so.

For companies who do not go the IPO route, it's often difficult to stay funded. Those who do open their company to the public, however, have a nearly unlimited potential for raising funds. It's also important to realize, though, that going public adds a certain amount of legitimacy that's quite difficult to garner if a company remains private. In years past, a business needed to be successful to take advantage of an initial public offering. These days, however, it's possible to use an IPO to reach success rather than the other way around.

In addition to all of this, going public allows a business to create a certain amount of liquidity. This, in turn, allows companies to offer employment benefits such as employee stock ownership plans. In the end, this makes working for a certain business more desirable, and it will quickly increase the chances of gaining the best individuals in the industry.

Being listed on a stock exchange may seem like something that only the big players, like Apple and Google, can do. Fortunately, this is no longer true, and a smaller business can have an IPO to assist in gaining capital and helping the company along. This process is complex, but with a bit of legal assistance by someone who's worked with IPOs before, there's absolutely nothing standing in a company's way of going public.

Source: Investopedia, "IPO Basics: What Is An IPO?", Investopedia Staff, October 07, 2014