Private Company into Public Company

Reasons for converting from private company to public company

There are mainly two reasons for converting the private company into private company

1.Withdrawal investment from business

 If the owner of the company wants to withdraw it investment from the business this can be done easily by enlisting the shares in stock exchange and then sell some portion of your share. In stock exchange a large number of buyer are available to purchase your share at market price. This provides an opportunity of getting maximum price of your share.

2.Bring New Investment

The other reason may be to bring the new investment into the business. Once the company is registered in stock exchange. The company may offer new shares to the market or to existing shares holder. It is much easier to get new finance for public company than to arrange equity financing for the private company.

3.Public company has more reputation

The other reason is to get benefit from the advantages available to the public company. The first advantage is the public company arranges more finance from the market both from the institution and from the supplier in the form of credit. The second advantage is that public company can apply for big project like construction of power project etc.

In private company risk are shares by few individual and in case of public company the risk is share by large number of shareholder.