Why should Australian entrepreneurs go public?

Highlights

• Times of turmoil bring apt conditions for entrepreneurs to emerge as strong players.
• To achieve bigger business goals, entrepreneurs can attempt to go public and mark success.
• IPO can be the next big step for an entrepreneur in the growth phase of his/her company.
• Firms go public to generate funds for better business growth, faster debt payment, and wider expansion of operations.
• Transition from a private to a public company brings with it publicity, influx of cash, more credibility in the eyes of investors and diverse ownership.

We are witnessing economic sinusoidal trends across the globe. Considering recent experiences, be it inflation fears, rising interest rates or the Russia-Ukraine debacle- to name a few, it appears that the economic roller coaster will continue this year.

While most companies have experienced challenging funding rounds and major layoffs, new businesses count it as an opportunity to be born and set foot in the market. Times of turmoil bring with them apt conditions for entrepreneurs to emerge as strong players.

To achieve bigger goals, entrepreneurs can even attempt to go public and mark success. While there are thousands of companies who have lived their growth journey after an IPO, there are several yet to begin their trading life. On this note, let us skim through few reasons why Australian entrepreneurs should go public.

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Becoming a publicly traded & owned entity with ASX listing

There’s always a first time, you just figure out when it is the right time for the first move. If an entrepreneur believes that his firm has attained strong fundamentals, proven profitability potential and meets listing requirements, then IPO can be the next step in the growth process.

Australian Securities Exchange (ASX) is one of the world's top exchanges listing lakhs of companies from diverse industries. In the Australian economy, there are over 2.5 million actively trading businesses, as per Australian Bureau of Statistics (ABS) report. The scale and scope of the companies listed on the ASX varies from small to large, depending on their market capitalisation.

IPO can be a road to riches for entrepreneurs

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Generally, companies make a swift move of pursuing an IPO (Initial Public Offering) or going public with the objective of raising funds that can pave way for better business growth, faster debt payment, and wider expansion of their operations. It is often seen as an option for corporate ventures and entrepreneurs to generate money for growth initiates from the sale of shares, instead of borrowing from conventional sources at high rates of interest.

Capital gains through IPO can be directed towards initiatives that can secure higher revenue and improve business profitability. With increased expense on research and development of new products and/or services, marketing, and advertising, and building a robust team, entrepreneurs can step up their position in the business realm.

Exposure to wider audience

With IPO announcements, tags along media hype, which may be short-term or long-term depending on how an IPO performs. Products or services offered by the company grab the attention of a larger target audience across regions. And usually, the publicity brings with it more prestige for the firm.

When a company goes public, it is monitored by the Securities and Exchange Commission (SEC) and regulated by the Securities Exchange Act of 1934 for regular audit and financial reporting. This ensures that a publicly traded company complies with regulatory requirements, and thereby, investors develop more interest and greater confidence in the company.

All in all, a company in public domain has a stronger appeal in the market. The presence on a stock exchange clearly alters how potential customers perceive a company.