So now you consider floating your company via an initial public offering.
Why float your company?
Well, fortunately, there's a lot of research to tell us why companies
have chosen to do this through time.
The number one reason, according to this particular survey,
was to create public shares for use in future acquisitions.
That is, as a currency in takeovers.
Second most popular reason was to establish a market price or
value for the firm.
And as we move down through the list, we see reasons that make perfect sense.
To broaden the base of ownership, to allow one or more principals,
that is founders of the firm, to diversify their personal holdings.
And you'll see down towards the end, to allow venture capitalists to cash out.
To demonstrate the IPO process, let's consider the e-commerce firm
the Alibaba Group, a Chinese based firm initially.
Alibaba listed in the US in 2014, raising approximately $25 billion,
giving it a total market capitalization of over $230 billion.
Now, the other $205 billion of shares were held by existing owners in the firm,
predominately in China.
Now let's consider the steps taken by Alibaba to get there.