Why Companies Delay IPOs

Companies stay private much longer than they used to.

Previously companies ran an Initial Public Offering to gain access to the public markets for financing.

Companies delay their IPOs for any of the following reasons:

Avoid the cost of going public which is fairly high given the regulatory requirements.

Maintain a level of privacy over their operations and financials by remaining private.

Continue to operate the business as usual with their own board of directors rather than gaining public scrutiny that comes with a public company.

Avoid the rollercoaster ride of sentiment in the public markets.

The private markets today provide sufficient capital to pre-IPO companies so the need for capital no longer drives companies to go public.

 

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.