What Value We Create Pre/Post IPO


A public listed company has direct access to the capital

markets and can raise more capital by issuing additional stock in a secondary offering. Public Listed companies can also more easily raise funds privately.

The more money your company can attract, the higher its company valuation. The higher its company valuation, the more your personal net worth is as a large shareholder of the company. For example, if the company raises $2 Million and the book value doubles, the value of the assets underlying your stock doubles.

Public companies can use their stock to attract and retain good employees. Good employees in turn create more efficient and effective operations. Better operations translate into higher earnings which translate into higher share prices. Higher earnings attract investors because they lower the P/E (Price Earning) ratio. Investors enter the market and buy your stock which makes the price go up. The price will go up, as a basic fundamental Supply/demand function of economics until a new point of equilibrium is reached. A higher stock price means a higher net worth for you.

Being a public company is more prestigious than being a private company. Let not this prestige be overlooked. Often because of transparency, many lenders, vendors and suppliers will be more apt to do business with the company because of the increased credibility. And being the CEO of a public company vaults you into an elite class of executives as the number of public companies are only a small fraction of the plethora of private companies.

Going public provides owners and founders an exit for selling their ownership holdings in the business. It’s referred to as the “ultimate exit strategy” because it provides the business owner with a paced and controlled exit, meaning it’s over time which can allow you to manage the process, extracting higher value as you go.