Page 179 - A Canuck's Guide to Financial Literacy 2020

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Advantages of “Going Public”

Going public has various positive advantages for a company. Some of the advantages
include:

▪ Raise Cash – By going public, companies are able to raise cash through the sale of
shares. Companies can use this cash to expand their operations and aim for growth.
▪ Public Image – Listing on a major stock exchange has a level of prestige that comes
with it. Public companies are more well known than private companies.
▪ Credibility – Before a company goes public, they must meet various requirements –
revenue, shares outstanding, initial share price, balance sheet, etc. These strong
requirements provide a public company with greater credibility than a private one.
▪ Access to Capital – Due to the increased scrutiny, private companies are able to get
better financing rates.
▪ Human Capital – Public companies are allowed to issue shares and encourage
employees to participate in stock ownership plans. This helps align the interests of the
company with that of the workers.