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Section: 7 Disadvantages of going Public
There are a number of disadvantages for companies to go public:
The initial and ongoing costs of going public are substantial.
Going public requires time.
Disclosure requirements increase for a public company.
If more than 50% of your shares are sold to the public, you may be faced with losing control of your company.
You can no longer make all decisions unilaterally or on an immediate basis.
Once the company goes public, there is a performance pressure to provide reasonable returns to the shareholders.
External economic factors and overall stock market fluctuations can affect the value of a company.
After an initial public offering, insiders’ shares are usually held in escrow for a period of several months to several years.
Levels of compensation, benefits and related-party transactions that may work for a private company may not be appropriate for a public one.