1. Access to Funds for Future growth/ Retire Debt
Listing the shares on a stock exchange allows the company to attract capital to fund both organic growth (modernisation and upgrade of production facilities, implementation of capital-intensive projects) and for strategic acquisitions.And also helps to retire the debts.
2. Cash Generation for the Company and potential exit for the current owners
Generates cash for the company which can be used for various purposes like retiring debt, Strategic expansions,general expenses, working capital requirements etc ,IPO also helps in trading the company’s shares at fair prices, which creates liquidity and provides an opportunity to sell the shares promptly with minimal transactional costs.
3. Maximum value for existing Investors/ promoters
IPO is an offer to a large number of institutional investors, HNIs and retail investors to become shareholders of the company. The large investor base along with the existing investors infuses a renewed enthusiasm in the management to perform better.
4. Company’s public profile gets a Boost.
Listing on a stock exchange means that the business will receive wide media coverage, thus increasing the company’s visibility and recognition of its products and services, which boosts the morale of the management and the employees.
5. Increases confidence among suppliers and customers.
Suppliers and contractors of a public company feel more confident about its financial state and organisational capabilities as compared to those of a non-transparent private business.Confidence among suppliers and contractors gives them confidence to deal with the company, and allows the company to obtain additional leverage in negotiating better terms for doing business and the customers also have a positive image about a listed company as compared to an unlisted company.
6.Increases the efficiency of the business
During the IPO process the company goes through comprehensive analysis of the business model and the implementation processes because of which certain internal changes takes place,which includes modification of the organisational structure, selection of the key personnel and delegation of responsibilities, improvement of internal reporting and controls as well as critical evaluation of the efficiency of the entire business. Normally, such extensive internal changes result in significant improvements in the management and controls and also helps them eliminate any previously hidden shortcomings in the internal functioning of the business.
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