Reference no: EM131958718
Do the paraphrasing and fix the grammatical problem given the advantages and disadvantages of Going Public.
Advantages of Going Public
- Access to capital markets: allowing the company to have the opportunity of accessing additional financing sources as well as lowering the cost of capital, providing the business with the resources its needs to further grow and increase the company's competitiveness via adding more assets to the company's financial statements, improve its marketing plans, and conduct research to aid in the creation of higher operations efficiency.
- Enhanced credibility with stakeholders: offering the company a dual impact on its internal stakeholders (employees), via implementing enhanced management practices, gaining the ability to recruit and retain the best talents and incentivizing employees with share options.
As well as its external ones (customers and investors) through the highlighting of the company's vision, values, and principles, financial strength and organizational structure to showcase meeting the required quality standards and transparency objectives to prove the company's high morale.
- Increase liquidity of shareholders: allowing the company's initial investors to sell all or part of their shares in the company during the issuance of the IPO or gradually as soon as the company is listed. It also offers investors the choice to increase their share in the company via market offerings and sharing the risks with new shareholders while benefiting from the anticipated increase in the company's value.
Disadvantages of Going Public
- Information disclosure: as companies go public, all their consolidated financial statements are available for the public to read and review. The greater disadvantage in this is the access of competition to the company's information and ability to follow the company's practices or use their financial statements in their favor.
- Time consuming and exhausts all company's resources: the process of issuing an IPO is usually conducted over the period of three months. in which, firms have to prepare prerequisites demanded by SEC such as a credible business plan, audited financial statements, performance measures, and projections.
In addition to gathering a reliable management team, and forming an external board of directors to look over the firm, the company has to develop relationship with all related stakeholders from investment banker to lawyers and accountants.
- Exposes management to public scrutiny: Having the company's finances available to the public also allows access to the government and public scrutiny of the firm. The form becomes subject to visits by SEC, periodic audits, quarterly reviews and issuance of annual reports are a must. This results in pressure from company's investors to achieving improved results year by year as the corporation's main focus would be to increase shareholders' value.
Nevertheless, going public is a big step for any company as this means that the company is allowing the public to own shares and become owners of the firm.
It also means that the company's prospects for growth should be high to meet the expectations of its shareholders and maintain its position in the market. Issuing IPOs is a good step for JetBlue as it is an aggressive start-up with potential growth, and being able to increase their capital via raising equity helps the company's progression in the airline industry amongst other rivalry firms with the right management's strategies and business practices.