Searching for shareholders
An Initial Public Offering (IPO) takes place when a private company raises capital by introducing its shares on the stock market and becomes a public limited company (plc). Before a private company can go public, it must comply with the requirements of the regulators of the stock exchange (Securities Exchange Commission in the US) and file an application giving full details of its accounts. Most companies prefer to use the services of
an investment bank to manageor
underwrite the offering.
Stock market launches
Listen to an expert talking about why companies decide to go
public. Match the three companies that she mentions with the reasons that she gives for their IPOs. 1 DreamWorks 2 Virgin Blue 3 Domino's Pizza a to payoff debt b to pay back investors c to pay for future expansion
Read the following statements. Which show the advantages of
going public and which show the disadvantages? 1 Management will face pressure to produce positive quarterly results. 2 Outsiders may impose their views on management. 3 The value of the business may suddenly fluctuate. 4 5 6 7 8 Speaking More people will be aware of the company's existence. '\ The company will be obliged to disclose financial information> The company can obtain finance without having to repay a debt. Employees can exercise stock options. Capital will be available for expansion. .i!
Work in pairs. Discuss the following statement made by Richard Branson before he decided to take Virgin Blue public and answer the questions below. The delightful thing about not being a public company is that we don't have to worry about foolish analysts who say stupid things. 1 Why do you think Richard Branson changed his mind? 2 When is it better for a company to go public rather than stay private? 3 How would you decide whether or not to buy the shares of a company that was going public? 4 Can you think of an example of a...