Looking at a
catalogue of companies like Facebook, Groupon, Vonage and Pet.com going public
after much hyped but eventually did not live up to the expectation. Why then do
founders/entrepreneurs go public apart from raising more funds which can still
be raised without going public.
Let us discuss
this.
the Facebook case baffles me, because, investors were well aware before the put their money into the company, and now a couple of months down the line, some of the investors are already talking about the "incompetency" of Mark Zuckerberg. To me that is pure unwise!!!!
ReplyDeleteI'm an entrepreneur and my partner and I sold our company for £10 Million.
we chose to sell, instead of getting investors on board, because most times, new investors almost always cause for a change of direction for the founders.
Anyways I could keep talking on about this.
But i just felt to comment on this.
WELL, THE MAIN REASON IS OBVIOUSLY TO RAISE MORE FUNDS. BUT I THINK THAT ATIMES, IT IS TO ESTABLISH THE POSITION OF THE FIRM AS A MAJOR PLAYER IN THE MARKET. THIS IS BECAUSE THE LARGER THE STOCK PRICE, THE LARGER THE VALUE AND THE LARGER THE VALUE, THE MORE THE FIRM IS VIEWED AS A THREAT BY ITS RIVALS AND ALSO THIS YEARN FOR A DOMINANTS POSITION ENHANCES THE STRENGTH OF ITS BRAND DUE TO INCREASED PRESS AWARENESS THAT WILL BE GIVEN TO THIS NEW FOUND GROWTH IN VALUE. ATIMES, I WONDER MYSELF WHY FIRMS LIKE FACE-BOOK, WHO ON THE OUTSIDE, LOOK LIKE FAIRLY STABLE FIRMS, CHOOSE TO VOLUNTARILY ENDURE THE TIRELESS AMOUNTS OF SCRUTINY THAT COMES WITH GOING PUBLIC, BUT I THINK THAT A MAJOR REASON IS TO ESTABLISH POSITION.
ReplyDelete