When a company goes public, it involves selling stock to a large number of investors. While this type of transaction is not in the best interests of every company, it can be beneficial for many companies. There are a few reasons that a company may consider going public instead of remaining a private entity.
Raise Capital One of the primary reasons that most companies go public is so that they can raise a substantial amount of money. When a company wants to expand its business operations, one of the most effective ways to do so is to go public. Within a very short period of time, the company could raise millions of dollars from investors who want to buy stock. The company can then use the money as it sees fit with no restrictions involved.
Avoid Borrowing Another alternative that many companies turn to is borrowing the money they need. The company could borrow the money they require from a bank or from private lenders. One of the issues with borrowing the money is that you have to go through the application and approval process. Another problem with borrowing the money is that you have to pay it back. When you go public, the money that you raise does not have to be paid back according to specific terms as a loan would.
Publicity Another benefit that comes with going public is the publicity that comes with it. When a company goes public, it will get a great deal of attention in the market. Analysts will provide their opinions on the company and investors will become aware of it. This helps drive up the price of the stock in some cases, and it can also help the company attract high-quality talent. The exposure that is gained through a public offering is generally more than a company could get through a marketing campaign.
Retain Control One of the major benefits of facilitating a public offering is that it allows the decision makers of the company to maintain a certain amount of control in the business. By comparison, if a company offers shares to private equity investors, they will usually lose decision making power. Many venture capitalists want a certain amount of control in companies they invest in. By going public, a company can keep enough stock to have decision making power if it wants to.
The Private Company which has gone public obtains the benefits of public trading of its securities, namely: • Increased liquidity of the ownership shares of the company. • Higher share price and thus higher company valuation. • Greater access to the capital markets through the possibility of future stock offerings. • The ability of the company to make acquisitions of other companies using the company's stock. • The ability to use stock incentive plans to attract and retain key employees.
Going public can be a part of a retirement strategy for business owners. • Simply by merging into a public company, a private corporation can increase its value by three to five times. • Considerable tax advantages are available through the reverse mergers, and proper exit strategies. • The newly created value can become part of an estate providing value not only for the founders, but for generations to come.
QSGI, Inc. announced that on March 21, 2011 its Plan of Reorganization (the "Plan") was confirmed by the U.S. Bankruptcy Court, Southern District of Florida, West Palm Beach. The final order confirming the plan will be recorded as early as today. As part of the Plan, QSGI will merge with KruseCom in a stock-for-stock transaction and is expecting to emerge from bankruptcy in approximately 60 days. Under the plan, stockholders retained their common shares.
According to Marc Sherman who serves as Chairman and CEO of QSGI, Inc., "The combination of QSGI with its restructured balance sheet and ties to large customers and investment markets and KruseCom with a profitable operation in a corollary business, deep management strength and strong balance sheet will provide a great launching pad to capitalize on the fragmented information technology services market." --------------------------------------------------------------------------------------- Huge amount of DD in the QSGIQ iBox/Intro Message!
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