Why do private companies go public?
Private companies decide to go public to raise capital and make it easier to recruit talent and complete acquisitions.
Companies typically pursue a stock exchange listing to raise capital to accelerate their sales, marketing, distribution business development and research initiatives.
While most investors think that capital availability drives management towards making a decision to go public, other very important reasons to go public include the ability to use stock option incentives to attract high quality talent and the ability to use common stock to make strategic acquisitions.
Some companies are driven to going public as part of the founders succession strategy, while others go public to provide their investors with a pathway to selling some or all of their shares to others.
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Regulation A governs how private and public companies can raise a substantial amount of equity and debt capital from their friends, family, business network and the general public.
Regulation CF governs how equity and debt crowdfunding can be used by entrepreneurs seeking a relatively quick and cost effective way to raise capital from their own network and the general public.
The cost for a private company to go public varies based on many factors. Startups can go public for less than $125,000 while larger companies will certainly spend more.
It takes about eight months for a private company to go public in the United States. The process to go public in the United States is very defined. The broad strokes include organization (and sometimes reorganization), planning, preparation of financial statements, audit of those financial statements, drafting of a registration statement, review by the Securities and Exchange Commission, filing with FINRA for trading and then applying to the desired stock exchange.
Investing is hard enough when presented with detailed information about a company and their team, product/service, strategy and financial results.