Posted in Finance, Accounting and Economics Terms, Total Reads: 237
Definition: Going Public
Going Public is the process of raising money/capital from the market/Public. The money thus raised from the public can be used for the expansion of the company. In the earlier time, the company goes public when they need capital for the project. But, with the advent of the private investors and Private Equity, the need for fund for the projects is reduced. The company goes public for strategic expansion of public. It is also called Initial Public Offering.
There are Certain Advantages and Disadvantages of IPO. The Advantages are diversification of ownership hence, reduction of risk, Increases prestige as the company has become more transparent, increases in the capital base
Disadvantages are pressure on management for certain amount of return to shareholder, Volatile market value of company due o change in stock price, more disclosure norms leads to revelation of company’s strategies.
There is a whole procedure for the listing of the company on the exchange. This is regulated by SEBI which thoroughly examines the complete documentation of company. Mostly it takes two years to become public after filing documentation of public. The time to go public is just one year after getting nod from SEBI.