There are a variety of reasons for companies to go public with an IPO. Some of the key reasons can be summarized as under…

By coming out with an IPO, the process of listing the stock in the stock exchange is facilitated. This gives a much wider audience to your stock and also gives a good benchmark for valuation of your stock. This is very useful in case of sale of business or sale of certain divisions of the business.

One of the most common reasons for an IPO is to raise money to finance the company’s requirements. Typically, IPO funds are used to meet capital expenditure, finance expansion and diversification plans, meet working capital needs and also to repay old high-cost loans.

Many businesses that look for foreign collaborations and foreign tie-ups see value in coming out with an IPO and getting the stock listed. Normally, listed companies are globally seen to be better regulated and adhering to higher standards of compliance requirements. Hence global companies tend to have a lot more comfort dealing with companies that are listed on a recognized stock exchange.