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CHAPTER 9 GROWING YOUR BUSINESS EMPIRE

Taking Your Company Public:
The Key to Joining the $100 Million-Billion
Dollar Club

Taking their company public is the ultimate dream of most
entrepreneurs. This involves listing your company on a stock
exchange and offering your shares to the public and to
institutional investors for the first time. This is also known as
an IPO (Initial Public Offering).

The money paid by these investors for these newly issued
shares goes directly to your company, which can then be used
to fund its growth. Listing your company is therefore a
strategy that will allow you to tap a wide pool of stock market
investors, providing you with millions of dollars of capital for
future growth.

However, as an existing shareholder, you will see your
shareholdings being diluted as a proportion of the
company's shares. This will be compensated because the
market value of the entire company will usually increase
substantially at the end of the public listing, the absolute
financial value of your shares (and hence your personal
wealth) will increase significantly.

For example, let’s say at the beginning of the public listing,
your company has 100 million shares, of which you own 60
million and your partner owns the other 40 million. Let’s also
imagine that your company is valued at $5 million as a private
enterprise. Since you own 60% of the company (i.e. 60 million
shares out of 100 million shares), the value of your shares
would be $300,000 (i.e. 60% x $5m).

286 SECRETS OF BUILDING MULTI-MILLION DOLLAR BUSINESSES