3 Most Important Tips Entrepreneurs Need To Know To Successfully Go Public

by Andrew McGuinness     Jul 16, 2019

A recent study has found that many owners and leaders of small and medium sized companies are lacking the knowledge to make the right decisions when it comes to equity financing. They’re either not educated enough or don’t have access to the information needed to decide whether it’s a good idea to enter the markets and start having its shares being traded publicly in an effort to raise more capital. Many believe it’s a good idea based on the things they read in the news or see on TV shows, but the truth is that they’re often surprised about some the nuances that come with being publicly listed. These aren’t things covered in Trading 101 but are essential to be a successful business leader.

This lack of knowledge often results in small and medium sized companies seeking advice from banks and other consulting firms, which often don’t have the best advice to give based on their own limitations. Let’s look at what equity Trading 101 means for being publicly listed as a company.

1) Researching listing mechanics and relevant markets

One surprise that many are unaware of is that it costs money to be listed publicly, and it isn’t exactly cheap either. Requirements change from exchange to exchange, for both the IPO as well as ongoing listings after that.

New exchanging are going to open up in several countries across the world, some of them specifically aimed at smaller companies. Different markets evolve at different rates, all depending on geopolitical events and locations – finding the right one for one’s business is critical to a successful IPO. Some markets are ideal for raising a lot of capital quickly, whereas others are far better suited to building long-term financing for its growth or projects.

2) Listing on an exchange that suits all your needs

Many people believe that the New York Stock Exchange is the only place to be listed for it to matter – which is very far from the truth. The New York Stock Exchange is generally a place to trade the largest companies in the world on, and that’s it – which is why it’s the most popular one of them all. General rule of thumb for this prolific exchange is that a company must generate at least $10 million in revenue annually to even apply to get listed on the exchange.

There are plenty of other great exchanges available. Canada, for instance, has a great stock exchange for smaller companies to get into. Do keep in mind that every exchange has a different set of requirements. Some do background checks on the leadership team, some want to see financial statements, some want to see your business plans – and a lot of them want all of the above. These listing standards apply to everyone and give confidence in the legitimacy of your business.

3) Engage with more than one type of investment

Going public can change the game for companies, especially if the IPO was successful. A successful round of public funding can be leveraged to gain funding from venture capitalists or other types of investors. Being publicly traded is a great way to gain attention from different types of investors and allows them easy access to your shares.

These are important factors to consider in the scope of marketing and sales as they’ll add credibility to a company’s reputation. It’s recommended to share the plans of being listed on an exchange with other potential investors early on as it’s something that’ll almost always interest them and conveys the message that they’re not your only option and that others are looking to get a piece of your equity pie. Press releases and whitepapers are especially useful for this.

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