Whether you are familiar with US stock market or the Toronto stock market, you know that when a company decides to go public it is a big deal. Making the decision to take a company public is a big decision that requires a lot of thought, planning and weighing of all of the options. However once the company executives have made the decision final and submitted the initial offering, there are many benefits both for the company and its shareholders.
One of the biggest benefits for a company, like Transglobe REIT, going public is the additional capital. Unlike private investment, the funds do not need to go through a series of investors. Rather they go straight to the company. While there can be limitations on what the funds can be used for, that is usually outlined in the prospectus and provided in a report to the shareholders. When a company increases its capital it decreases the debt-to-equality ratio and increases its net worth. This will help increase the value of the stocks for the shareholders, as well as help the company stay out of debt. When a company has more capital, they have more opportunities to grow the company and make other investments.
Going public and increasing the capital also increase the company’s ability to hire and retain top employees. While in the past they may not have been able to afford such top ranking employees, they are now able to offer different stock options as a way to help make up the difference in pay. Even lower level employees can be included in these benefits.
Whatever circumstances led to a company deciding to go public, once the decision has been made the only way to go is up. By taking advantage of the many benefits that going public offers, not only will the company be pleased with the results but the shareholders will be pleased as well.