Are you thinking of listing your business on the stock market? There are both advantages and disadvantages to getting a listing. However, if your business is ready and it qualifies, maybe this is something you should consider.
Selling stocks to investors helps you raise capital and gives you prestige in the business world. In addition, it can increase profitability and be a good move for your company. Businesses that list on the stock exchanges are usually highly competitive and profitable.
Unfortunately, you can’t just start selling stocks in your company, and you can’t go up to the exchanges and demand a listing simply because you want one. There are many legal steps involved before you can offer stock options. So it would be best if you navigated these before you can start offering your stock.
Share Undervaluation
Despite all the work you need to do to get your company to list on the exchange, issuing shares does not automatically give you instant liquidity. If there is a lack of demand for the shares, your stocks may be undervalued and only worth a meager share price. It just doesn’t imply instant success. Even if you get all the paperwork completed, this doesn’t mean your shares will be like THW and sell upwards of $15 per share. Share prices are affected not only by consumer demand but also by the company’s performance and the market as well as the economy in general.
How to Go Public on The Stock Exchange?
To complete the first step of going public, you need to register your listing with a Form S-1 with the Securities and Exchange Commission. A registration statement includes:
The corporate perspective.
The document you offered to the people who buy your shares.
An accurate description of your business operations.
It will include backup documentation demonstrating your financial well-being, the effective management of the company, and any risk factors that shareholders might face.
The SEC requires full financial details of your business and can reject your proposal when your information is inaccurate or incomplete. In addition, smaller companies have the option of using a streamlined SEC registration.
High Standards
Getting accepted to a major stock exchange is much like getting accepted to an exclusive golf club. Stock exchanges don’t take anyone. They usually have listing requirements that a company needs to follow before they can list on an exchange. Only the final part of the process allows you to place a valuation on the stock share price and the availability of shares to the public.
Once your business stock begins trading on an exchange, the standards become a bit more flexible for you to remain on board. However, if you don’t keep up with your basic requirements, the stock exchange can drop your stock.
How to Get On a Stock Exchange?
Exchanges work differently, and so they set their own standards. If you don’t qualify for one board, you might be welcome at another. For example, the NYSE has a separate market for American companies that aren’t large enough to be on the larger stock exchange. When you find the right exchange, then you can pick your ticker symbol for the company. However, that symbol also needs to meet the board’s rules SEC requirements and not duplicate any other business symbols.
Why Go to the Trouble of Listing Your Business
The most significant advantage to listing on the stock exchange is that it creates a market valuation for your business and gives you the opportunity of finding funding for growth. In addition, it gives your company access to revenue from a stock acquisition. Sometimes listed companies also use their share to make acquisitions reduce the need to use cash.
Listing on the stock market also encourages employees to be more committed to the company, and it rewards them with value when they qualify for stock options.
When you list on the exchanges, your business gets a heightened public profile, attracting a higher caliber of customers and directives. It also improves your supplier chain customer confidence. This aspect of a listing can improve your business and bring you more revenue.
Still, it would help if you kept in mind that listing a company requires a lot of research and paperwork.
Disadvantages
When you take a company public, all of your actions come into scrutiny. You are held accountable for every decision you make and ensuring that the company has growth. Above all, you must comply with all of the rules of the market. So you will need to name a board of directors and hire a firm to manage and follow through on the approval process.
Cost of Preparation
There is a substantial cost in time, management, and capital to get a listing on a stock exchange. It’s a process that can take up to a year or more to prepare for and requires a substantial amount of administration time from both you and your employees. It is a labor-intensive and hands-on process, so it’s not always the right solution for every business.
2018 ·