Should You Take Your Company Public?

Question:
Should You Take Your Company Public?

Short Answer:
If your goal is to exit, no.

Longer Answer:
Transitioning from a privately held company to a publicly held company is generally not an exit strategy regarding the short term.  Typically, this move of converting your privately held entity to a publicly traded company is used as a strategy to raise capital; it is a financial tool used to grow your company and take it to the next level.  Short term speaking, a public offering should allow you to remove some of your chips off the table, but the success of the public offering relies heavily on the management team that you will lead. 

As a CEO and substantial shareholder, your financial privacy will be nonexistent and your authority to make the decisions you enjoyed as the owner of a private company will be gone.  You will be considered an employee of the publicly held entity who reports directly to your board of directors.   Also, your investor agreements and the underwriters who took you public will restrict your ability to leave the company and cash out your stock.  It is common to be prohibited from selling your stock for months if not years and then by the time you can sell your stock, you will have to sell it in fractions that comply with SEC regulations.

If you want to grow your company and stay actively involved for some time, then consider using a public offering to achieve these goals.  If, on the other hand, your sole objective is to sell and walk away, then going public may not be the right option for you. 

See how it worked out for Bill by asking us about his personal story relating to this question.  If you have any questions or would like the complete answer, please reach out to MB Law at info@mb-law.law to request your complimentary copy of "Deciding To Sell Your Business, The Key To Wealth And Freedom," that has over 50 questions & detailed answers with personal stories.

* This information is for general purposes only and is not intended to constitute any specific legal advice of any type.