Is the investment paid for the placement of the company’s shares on the stock exchange?
Shareholders who sell shares receive cash today, but often lose from selling shares and losing control of the growing company.
In the case of selling its shares on the stock exchange, the company immediately receives money, which is invested in its development. In turn, this means, to a certain extent, the loss of control over it and in the future, with a positive growth dynamics, also the loss of part of the income.
If equity capital is attracted on the open market, then costs may increase long before the insurers and consultants receive profits from IPO.
Additional financial expenditures are also required to comply with the requirements set by the exchange, ensure communication with investors, and provide frequent more detailed reporting.
In some cases, it takes years of checks and calculations to assess the profitability or unprofitableness of conducting an IPO, taking into account the costs of this enterprise.
Market entry factors in the current market environment
Investors’ interest in IPO can vary greatly depending on the action of various factors:
- general market stability;
- how market participants relate to IPO at the moment;
- economic conditions in the industry of interest;
- changes in technological processes.
We have listed only a few of them. In this case, the most unpredictable is the volatility of the stock market – how much the value of a certain financial instrument is subject to market fluctuations.
Hence it follows that, in the final analysis, depends on the correctly chosen time for entering the IPO, whether the best results will be achieved.
The market sentiment is constantly changing and there is no exact forecast of their changes, but the company must correctly determine the time of entering the stock exchange and be always ready to change its plans if necessary.
Suddenly, a “window” may be open for an IPO company from the desired industry. Preference is given to them at the moment. It happens that this preference is given to companies from all industries.
If at such a moment of the open “window” you do not go to IPO now, but postpone the exit for several weeks, then the deal may be postponed, it may be withdrawn or you will lose value.