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The Pros and Cons of Going Public

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
The allure of an initial public offering (or IPO) for CEOs and CFOs can be strong as going public may represent the chance to cash in on a lifetime of hard work spent building a company, or to raise a large amount of capital to fund business growth and expansion.

But the lure of an IPO can just as easily be a siren song. While most of the large corporations in the U.S. probably wouldn’t be where they are if they hadn’t gone public, many other companies have experienced first-hand the potential drawbacks of an IPO. For IPO success stories like Apple or Microsoft, there are examples of businesses that failed to thrive (or even survive) in the challenging environment and under the intense scrutiny faced by public companies.

Clearly, there are pros and cons to taking your company public, and this article reviews six benefits of IPOs along with three potential drawbacks. Addressed are areas such as financial rewards, growth capital, capital markets, employee retention, liquidity, costs, control and pressure to meet investor expectations.

The decision to move forward with an initial public offering is one of the biggest that a Los Angeles or Southern California CEO or CFO may have to make if their companies reach a certain size and want to continue growing. An outsourced CFO services firm that is experienced in IPOs can provide invaluable assistance and guidance in this decision-making process. In our next article, we’ll look at some of the factors involved in making the going public decision.

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