1. Access to capital
Being a public company can give investors more confidence in investing in your company. When your stock has a public price, it gives you a benchmark price to raise capital. Any potential investor can go on the Internet or call a broker and get a quote of your company’s stock price. Some public companies then give investors who buy stock directly from the company in a private placement a discount from the public trading price (if they are willing to hold the stock for one year). This gives this investor even more of an incentiveto invest.

Money raised can be used for a variety of purposes including; growth and expansion, retiring existing debt, corporate marketing and development, acquisition capital and corporate diversity. Once public, a company's financing alternatives are greatly increased. A publicly traded company can go to the public markets for capital viaa stock or bond issue, and may also convert debt to equity.

2. Liquidity
By going public, a company can create a market for its stock. This gives the company a greater opportunity to sell shares of stock to investors. In general, stock in a public company is much more liquid than stock in a private enterprise. Liquidity is created for the investors, institutions, founders, and owners. Investors in the company may be able to buy or sell the stock more readily. Often times institutional investors and venture capitalist will require a company to become public before committing funds.

Ownership of stock in a public company may help the company's principals to borrow more easily and eliminate personal guarantees. Liquidity can also provide an investor or company owner an exit strategy, and portfolio diversity. Liquidity is one of the many reasons why public companies are typically valued so much more than a private company.

3. Mergers and Acquisitions
Once a company is public and the market for its stock is established, the stock can be considered as valuable as cash when acquiring other businesses.

A public company usually increases a company's valuation leading to a variety of opportunities for mergers and acquisitions. A public company also has the advantage of using the market's valuation when exchanging stock in an acquisition.

Securities and Exchange Commission disclosure requirements offer the public more confidence because in annual reports the company outlines its financial condition and corporate strategy which encourages corporate growth, development and merger activity. In addition to acquiring companies many other assets can be purchased withstock.

4. Increased Valuation
The market value of a public company is normally substantially higher than a private company with the same structure inthe same industry. Converting a private company to a public company results in a substantial increase in value to owners. Statistics published by the United States Chamber of Commerce show that sellers of private companies receive an average of 4 to 6 times their net earnings. By comparison, public companies sell at an average of 25 times their netearnings. High tech companies are valued even higher.

Investors in a private company will discount the value of its equity securities by reason of their "non-liquidity" - the lack of a ready, public market for them. Thus, public companies often are valued so much greater than private, similar companies in the same industry. The availability of other alternatives to raising capital permits a public company greater leverage in its negotiations with both institutional and individual investors. Many institutional and individual investors prefer investing in public companies since they have a built-in "exit," that is, they can sell their stock in the public market. Many companies that were private and about to be purchased went public to be purchased at a much higher price.