Initial public offering IPO is a process of enlisting your company in the stock market for the issue of shares to the investor for a considerable amount to attain capital investment for expanding the business.
Well, we will know what is “IPO: reasons why companies enter into Stock Market?”
Why does a company enters into the stock market/Why do companies go public?
Well, there are many reasons for a company to come into the stock market but the main intention is to acquire the market position and to make a profit,
and get a huge amount of capital funding in the form of investment from the shareholders/investor.
To Create A Brand Image In The Market:
Well, the public in today’s era is very fond of the brands. People focus very much on what they eat or what they ware it has to be a brand.
So to create that value about their company in the market companies enters the share market.
A brand image attracts the public and encourages the people to trust and invest their time and money in their company.
To Acquire Market Ratio:
The market ratio stands for the value that a company holds in the market.
For example: Let’s say there are 100 steel manufactures in the market but 1 specific company is identified by all, everybody knows their name.
Ever wonder how? That’s right Branding is your answer the bigger the Brand the higher the revenue,
the higher the revenue the higher the market value.
That 1 company owns at least 40-70 % of all the sales of steel in the market.
Which increases its hold in the market and he can eliminate his competitor easily.
To Expand Business:
Stock market gives our company an opportunity to introduce ourselves to the whole world which will lead us to the new investor and franchise,
huge capital flow from public offering and merger.
To Acquire The Required Capital:
Well we all know to run a business we need huge capital that is when the stock market comes as a helping hand by issuing the share,
people buy our stocks and provide us with financial assistance which can be used to run our business.
To Clear The Liability:
It requires a lot of capital to run a business so sometimes companies tend to take a loan in the bank which is at a very higher rate of interest,
but by allowing the company to go public, people invest their money in our company and in return all we need to provide a dividend.
which is considered a very low amount compared to any bank.
Well, we have covered the topic of IPO: Reasons why companies enter into the stock market? well after entering into the stock/share market all the activities will be regulated by the Security Exchange Board Of India(SEBI) who is the governing body for all the companies that enter into the stock market, well whatever the reason it may be but there is always a growth factor that will be given boosting the companies performances and will certainly elevate the companies status and bring the trust to investors of the company.
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