If your company wants more finances and you do not want to dig into the retained earnings, financial flotation is the way to go. It will allow you to get finances from outside sources. It is a natural step towards development of a company. Floating your company on a public market will give you many benefits.
The main benefits are:
- Access to capital – You will have access to sources of capital from outside. This will increase the amount you can garner for your business needs.
- Liquidity – With increase in source of capital, the liquidity factor of your company will be enhanced. You will have more liquid cash on you hand which can be used to develop key factors for the development of the company.
- Global profiling – Flotation which will increase the value globally. You will have investors from all over the world which boosts the profile of your company.
So the question is what should be taken care of before financial flotation. There are many things to address before going public. Here are a few basic things to keep in mind.
- A strategy and business plan – You have to have a clear cut plan of using the extra generated capital when you go for financial flotation. A business plan is the right answer to this impending question.
- Board Structure – A robust board structure must be shaped before going public. You will have more money but more investors as well. Managing the investors is best done with a well-equipped and robust board.
- Corporate Governance – A company listed on the stock exchange will be more marketable, but will require corporate governance to pull it through in the cut throat competition. This issue should be addressed well before flotation.
- Timing – Too early or too late flotation does not work well. Before going public you need to assess the needs of the market and the stage of development of the company. The flotation done at the right time will help you reap rich dividends.
- Assessment of the cost – Flotation is not free. It will cost you to get listed on a stock exchange, so make sure you can pay the expenses.
Flotation is a natural course for a company that is growing. However it is better to research the market well before entering into flotation. It is a well-known fact that a war can be won before fighting it if you plan in advance. So, float at the right time to take you company forward.
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