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Important factors to consider before going public, part 1

Many entrepreneurs dream of the day when they will be able to take their company from private to public with an initial public offering. After all, IPOs can offer numerous benefits for business leaders and shareholders. But going public is not a decision to take lightly.

There are several important factors to consider before taking the leap to make your company public. In this two-part blog series, we will examine several of the most important things that business owners should take into consideration before pursuing an IPO. This post will go over several potential risks that you should know about before you decide to go public.

The risks of going public

The benefits of IPOs speak for themselves. Raising capital, redeeming debt, gaining liquidity and boosting your company’s reputation all sound very tempting. Still, there are some reasons why business owners may hesitate to pursue an IPO.

  • Many business owners, particularly ones who are involved in international business, are wary of the current international economic and political climate. China’s economic growth is stagnant, there is increasing unrest in certain parts of Europe and the Trump administration’s policies have inspired unease in many demographics.
  • The number of IPOs in the United States is at a record low. In 2014, they were at an all-time high of 348, but that number plummeted to 128 in 2016. There has been some improvement this year, but small- and medium-sized companies may still feel concerned about the future of IPOs.
  • Recently, there have been several high-profile failed efforts to go public. These should act as warnings for any company that is considering the transition. From SnapChat to Redfin to Blue Apron, businesses that are expected to have success as IPOs can sometimes flop.

Other options for the public market

Ultimately, IPOs are not the only way to benefit from the public market. There are several alternatives that entrepreneurs can use to their advantage. In our next blog post, we will examine a few other options that you should know about before taking your company public.

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

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