What are the major advantages of going public?


What are the major advantages of going public?


What are the major advantages of going public?

Explanation & AnswerSolution by a verified expert


Advantages of going public are :

Enhanced liquidity: When the general public is invited to invest in the company, it will bring more funds and enhance the liquidity.
Trading platform: Through going public, securities of the company are listed on a trading platform that enables it to raise capital while strengthening its structure and reputation.
Diversification: By inviting the general public for investment, a company can diversify its holdings by purchasing additional assets either financial, physical or otherwise through raised capital. Physical assets in turn help to increase the production capacity and thus the profitability of a firm.
Reduction in cost of capital: With inclusion of more equity through public offer, a company can reduce the amount of debt in its capital structure and thus reduces the cost of bearing debt.

Verified Answer

Advantages of going public are:

It enhances the liquidity of the firm.
A firm can trade its securities on a recognised platform.
Going public helps to diversify the holdings of the company.
Going public reduces the cost of capital incurred by the firm.

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