The 3 most overlooked and impactful consequences of going public

I have seen many young companies be so mesmerized by the equity financing solution of going public that they appear not to have sufficiently considered all the downsides that come with this decision.

Going public is as much a philosophy as it is a way of raising equity.

The 3 most overlooked and impactful consequences of going public are reflected in the loss of:

1. Quick decisions;

2. Control and confidentiality;

3. Low-key processes.

Quick decisions are gone. To document consistency, business decisions will have to be made along the lines of the proclaimed business strategy.

Control and confidentiality are gone. You will be continuously in the public eye, answering frequently to your company’s financial performance, business plan and milestones.

Low-key processes are gone. It may feel cumbersome to deal with shareholder expectations,

meet extensive periodic reporting requirements and maintain corporate governance at a high standard suitable for a public company.

However, there are also very attractive benefits over and above the access to capital, which you’ll want to weigh against the negative consequences of going and being public. In the next of my 3-part Going Public posts, I will address The Top 3 Benefits of Going Public (besides access to capital), followed by Three Clever Alternatives to Issuing Shares when the Company’s Stock Price Is Low.

For more detailed information about going public and equity financing in general, see The Decision-Maker’s Guide to Long-Term Financing – available here.