Initial Public Offering: What happens when companies “go public”?
When a once small company finally reaches its potential for success, it would need more capital to take their venture to the next level – and an Initial Public Offering (IPO) is an approach that allows them to generate enough funds for their needed expansion.
In definition, an IPO is an option that allows companies to make their shares of stocks available to the public. In other words, publicly sharing these stocks means owners of a company will give up their ownership to buyers who then become the company’s stockholders.
Aside from generating a massive capital to expand one’s business venture, “going public,” as companies that take the IPO approach are described, can mean a big payday for business owners from all the hard work that have helped their business make it this far. Naturally, IPOs become of massive interest from asset management firms and investment companies, including those offshore such as LOM Financial.
While such move is most common for private companies seeking for more capital, corporations also take the road to IPO to become publicly traded companies. Usually, owners would take a significant percentage of their company’s initial shares of stock that oftentimes rewards millions even just on the first day of going public.
China’s Xiaomi Corp., for instance, was just once an $11-million startup – but their plan for a blockbuster IPO is predicted to up the company’s worth to $1 billion & $3 billion. Now, the company’s pioneer workers who built the foundations of the successful smartphone corporation are set to make millions.
Beyond the rewards and increase in financial capital that company owners can get from their IPO, this move is an important factor that easily attracts the most important resource of all: human capital. Companies that offer stock options are a magnet for top talents because of the optimism that they gain from the promises of a successful IPO.