What does it mean to “take a company public”?
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Going public means offering shares of capital stock to the public on the open market. There are a number of regulations involved so that the public gets full disclosure about the company. Even so, many question whether an average person has nearly as much information as a big hedge fund or pension fund.
In the U.S., a company that goes public usually applies to list its shares on an established stock exchange, such as the New York Stock Exchange or NASDAQ. Often individual investors will wait to purchase shares until after a market price has been established and the shares are resold in the public market. That’s a far less risky purchase, but also less likely to be profitable.
The advantage of going public is far more access to capital, which can make the original investors quite rich and allows a successful company to grow to an enormous size. The disadvantage is the duty owed to numerous shareholders and the requirements imposed by laws and regulations designed to protect those shareholders.
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