Outline three ways in which a medium-sized private company may benefit from going public, providing a rationale for each.
Overview
Assume that you are a CEO of a medium-sized company that needs a significant influx of cash for several expansion projects. As the CEO, you must determine whether your company should remain private or go public. Some companies postpone going public due to the unpredictability of economic and market conditions. Consider the ramifications of both alternatives. Construct an argument for and against going public. Before providing your response, review the guidelines and regulations associated with going public by reading Information for Small Businesses.
Use the Internet to research Sarbanes Oxley Act—Summary of Key Provisions.
Instructions
Write a 4 page paper in which you:
1. Outline three ways in which a medium-sized private company may benefit from going public, providing a rationale for each.
2. Create an argument that the same goals may be achieved if the company remains a privately held entity. Provide support for the argument.
3. Suggest four leading financial ratios that will be evaluated and how each will affect the company’s decision to obtain expansion funds. Determine whether the results of the ratios would alter the decision to go public.
4. By researching the results of SOX compliance surveys, assess the financial effect that SOX might have on a company if it decides to go public. Considering the impact of SOX compliance, take a position as to whether your company can overcome the challenges posed by SOX compliance if the decision is to go public. Based on research, support the decision by identifying the potential advantages and disadvantages that SOX may have on the company. Provide specific examples.
5. Make a recommendation as the CEO regarding the alternative (i.e., going public or staying private) that will best support the company’s expansion goals. Support the position.
6. Use at least four quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as academic resources.