Advantages And Disadvantages Of IPO

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In this phase, the company must get prepared for going to Public through the following steps: 1. Build new capabilities through maximizing their “Shareholders Value” (Mbhele). “Shareholders Value” means the value that the shareholders will receive from investing in that company. 2. Enhance the company’s “Corporate Governance and Transparency” (Mbhele). Corporate Governance refers to “set of systems, principles, and processes by which a company is governed” (Thomson). They are like instructions that help in controlling the company so that it can achieve its goals. 3. Develop an Effective Growth and Business Strategy. The business Strategy is the first step towards establishing a successful IPO. It should include all the information needed to…show more content…
Going public is very expensive it costs from $250,000 to $1million range and if it failed at any point of time, the company will lose all their money. There are other costs that the company needs to cover in the process and ongoing of IPO such as legal and accounting fees, filing fees, printing costs, underwriter expense allowance and report and certificates that requires to be issued on annual basis. There is also an increased risk of exposure to civil liability for public companies, executives and directors for false or misleading statements in the registration statement. In addition, there is a litigation Risk officers may face liability for misrepresentations in reports filed with the SEC, for disclosing false information about the company or for insider trading. The company may lose control if more than 50% of the shares are sold to individuals, the original owners could lose control over the company. Nevertheless, the company loses its privacy when reporting and publishing its financial statements as required that have never been there before going public. Pressure of performance when going public is much higher than that of the private, in which the owner is no longer independent and always accountable to their shareholders and board of directors. IPO process is one way process, so there is no turning back. The "lock-up" period restricts the stock sales by insiders for at least 180 days following the…show more content…
The founders started the company as a small business, with a belief that the internet would be the playing field and any small company will grow and compete effectively in the global economies. AliBaba group operates leading online and marketplaces in wholesale trade and retail, in addition to cloud computing. AliBaba provides service that enables customers, merchants and others to conduct commerce in their ecosystem. The firm dominates online shopping in China, which has passed America to become the world’s biggest e-commerce market. In terms of gross sales, Alibaba is bigger than eBay and Amazon combined. Revenues shot up 46% in the second quarter, year-on-year, to top $2.5 billion; and profits almost trebled to $2

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