Listing or going public, as many people call it, is the process of making a transition from a private organization to a publicly owned entity in which all or some shares of the company can be traded on the stock exchange. The ability of the company’s shares to be traded on the stock exchange is critical to an organization’s decision to list the company.
Essentially, the stock exchange brings together the providers of capital and the organizations that require capital in a single market. The stock market takes on this simple but effective role in many countries and as such acts as a hub at the center of many countries’ economies. Capital providers earn a return on investment (ROI) through capital growth and dividends, which increases the overall wealth of the country. Likewise, the organizations in which capital providers invest offer and provide employment, thus promoting the economic development of the company. These are just two benefits of having a publicly traded company, but on a more personal note, there are 8 reasons why you should list your company on the stock exchange. Read and find out what these 8 reasons are:
o Capital Growth
Going public provides opportunities for both the investor and the listed company. The publicly traded company finds a great opportunity to raise its core capital for organic market growth and acquisition financing. On the other hand, investors who invest in the publicly traded company can easily increase their savings through dividends and stock price fluctuations.
o Elevation of the Corporate Profile
Listing on the stock market generally raises the public profile of the organization with its customers, investors, suppliers, and the media. Publicly traded companies typically become part of analyst reports and are usually included in the index.
o Improvement in the Company’s Valuation
The generation of an independent valuation becomes possible when a company is listed on the Stock Exchange.
o Institutional Investment
It is easier for an organization to attract institutional investors or other companies that want to invest in other companies. This simply means availability of both experience and capital.
o Trading Platform
Many stock companies offer an ideal trading platform for company shares. These companies also provide their shareholders with a great opportunity to realize the value of their holdings, which can eventually help the company expand its shareholder base.
o Alignment of management/employee interests
The remuneration process with shares of the company’s executives, directors and employees is simplified, making it easier and more flexible to align the interests of the company’s employees with the goals and objectives of the organization.
o Tranquility of Suppliers and Clients
Organizations listed on the Stock Market generally find improvements in their commercial and financial strength.
o Exit strategy for investors
Going public provides founders and investors in the company with a mechanism to easily exit their investments.