Businesses go public for a variety of reasons, but most growing companies consider a public offering to obtain additional capital for corporate growth. Before deciding to go public, consider the advantages and disadvantages.

The Advantages

● Unrestricted use of funds

Use of the proceeds from a company's sale of securities is generally unrestricted, provided it conforms with the stated "use of proceeds" as disclosed in the prospectus. The funds may be used for research and development, acquisition of property, plant and equipment, reducing existing debt, or increasing working capital.

● Compensation vehicle

Stock-based compensation plans for a publicly traded company provide an excellent compensation strategy for attracting and retaining managers and key employees.

● Improved financial condition

The sale of equity securities will increase the company's net worth and generally improve the company's borrowing capability. If the company's stock does well in the public market, additional capital funding can be raised on favorable terms. Management thus increases its financing alternatives while lowering costs.

● Acquisitions

Publicly traded stock serves as a form of "currency" enabling companies to make acquisitions by offering its own stock, thereby not incurring additional debt or selling assets.

● Prestige

By going public, more information is available on a company, and through publicity and press exposure of the company and its products, its marketing and business opportunities are expanded. A public company becomes more visible and the image of the company seems to be elevated in the minds of the business community. Some suppliers and customers may prefer to do business with companies whose financial statements are publicly available.

● Marketable holdings

Once a company goes public and a market is established for its shares, the shareholders can readily determine the market value of their holdings. The public markets establish liquidity for the shareholders' investment.