When your Company or business needs additional capital, "going public" may be the right choice, but you should weigh your options carefully. If your Company is new, it may be better to seek loans or to raise money by selling securities in transactions that are exempt from the registration process (see Private Placements on this site in “Raise Money for Your Business”).

         There are benefits and new obligations that come from raising capital through a public offering registered with the SEC. The benefits are attractive, but you will also need to assume new obligations.

 

* More Capital.  Access to capital increases because more potential investors can be contacted.

* Notoriety.  Your Company may become more widely known.

* Ease of Financing.  You may obtain financing more easily in the future if investor interest in your Company grows enough to sustain a secondary trading market in your securities.

* Marketability of Shares.  Shareholders, including the Company's officers or directors, may have a ready market for their shares, which means that they can more easily sell their interests at retirement, for diversification, or for other reasons.

* Stock Options and Incentives with Known Value.  Your Company may be able to attract and retain more highly qualified personnel if it can offer stock options or incentives with a known market value.

* Improved Image.  The image of your Company may be improved.


* Time and Money.  Your public offering will take time and money to accomplish.

* Shareholder Information.  Shareholders must be kept informed about the Company's operations, finances and management, which incurs costs and fees.

* Penalties for Noncompliance.  You may be liable for failure to keep shareholders informed as required by law.

* Shareholder Approval.  The Company may be subject to additional rules concerning the Company's affairs due to the need for shareholder approval of management’s actions.

Also see the article on this site, “Raise Money for Your Business”.