What are the drivers to going public:
To provide an exit for early investors – whether the company is PE or VC-owned, or owned by a small group of individuals
To raise capital for growth and to pay down historic debt
To boost the value of a business – most private companies’ are not highly valued as the matrix used are conservative, once listed however the market will define value, often forward looking rather than balance sheet based, making it much easier to acquire other companies using their own stock and obtain more access to debt to do deals
To incentives staff – an IPO on the horizon makes employees more loyal and work significantly harder
To market the business – especially for lesser-known companies, an IPO is a great way to increase prestige and visibility to attract new investors, partners, and customers
To raise liquidity creating a big cash event for the business
Many early investors will exit before IPO via the secondary exchanges as their pre-IPO shares gain value
To raise money without necessarily loosing control of the majority
To comply with the 500-shareholder rule in the US that demands that any business with many shareholders goes public
