I am interested in how the amount of shares is determined initially and how the company determines how many shares they will keep. Also, what is the biggest “Pro” of going public and the biggest “Con”?
In: Economics
The current owners will determine how much to sell / keep in consultation with their investment bankers. If they keep a controlling stake, however, that may affect how much money they can raise.
The biggest “pro” is the ability to raise a lot of money (in the form of equity as opposed to debt) at once, and generally this is an exit strategy for current ownership – for example, a private equity firm buys an under-performing company on the cheap, rights the ship, and then recoups their investment/realizes their gains by selling the company via an IPO.
As others have noted, the biggest “con” is the reporting / other obligations under the securities laws that result from now being a public company.
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