Finance

The term going public describes the process through which a private company issues shares of stock to the public for the first time. Also known as an initial public offering (IPO), going public transforms a business from a privately owned and operated entity into an entity owned by public stockholders (Benton, 2005). Going public is a significant stage in the growth of many businesses, as it provides them with access to the public capital market and also increases their credibility and exposure. Becoming a publicly held company involves significant changes for a business, though, including a loss of flexibility and control for management (Benton, 2005). In many cases, however; going public may be the only means left of financing growth and expansion. Venture capitalists or founders who wish to cash in on their early investment sometimes influence the decision to go public (Benton, 2005). This will create multiply financing opportunities, convertible debt, and new customers.

When acquiring another organization within the same industry there would be other opportunities imposed. A company would first have to deal with the merger and come to an agreement of what is in the best interest of both parties. A company would look at what company has the best processes and implement them. Also a company would have to look at if there will be a layoff of employees to raise the capital even higher. Two companies working as one will mean double the cash flow of money that means you can take on more debt. When there is more debt, there will come more assets, which will raise the capital of the business.

Merging with another organization such as joining a family of companies would open multiply opportunities for capital. Acquisitions and mergers are when the business joins or buys other businesses, not necessary of the same type (Tutor2Me). Multiple companies working under the same umbrella gives you the flexibility to have major assets and not take all the risk. One...