Going Public

Exiting as a result of an initial public offering (IPO) is very rare for most privately-owned businesses, since the costs of the offering are not practical for a company with a value under $100 million. A public offering requires a strong management structure, SEC approvals, and is subject to numerous operational constraints. It requires a large up-front investment and many months, if not years of planning. Additionally, the post-IPO company will usually undergo many changes. Organizational changes include the addition of shareholders, a Board of Directors and new personnel to deal with investor relations and SEC requirements.

However, this exit option can help businesses raise significant capital in the short-term, and build enormous wealth for the owners over the long term. Business owners who elect to exit through an IPO are more likely to get a premium price for the business than through other means, and may benefit from a well-paced and controlled exit.