Initial Public Offerings – Voluntary Retirement


An initial public offering or IPO is what is also known as a public float. When a business is of a size that requires that it needs further capital to grow and the capital cannot be obtained cheaply enough by way of debt, or when you have reached a point when you are prepared to trade off a large sum of money in return of losing absolute control of the way you run the business an IPO should be considered.

In a technical sense and IPO is a sale by you of your business for cash and or shares to a public company. In the sense that an IPO is a sale the considerations of selling(above) are relevant. In addition to those considerations, you should consider:

Whether you are retiring from the business entirely or merely relinquishing some control?

If you are remaining in the business but with lesser control, how much control will you part with?Succession Planning Call to Action

In relinquishing control you need to recognise that by your business being acquired by a public company, the company is subject to being taken over by third parties, which could result in your losing all rights to the business. Is what you are to receive from the IPO sufficient consideration for you to take this risk?

Can the business afford the additional heavy costs of operating as a publicly listed company having regard to the need to have independent directors, pay listing fees and ensuring that the company has appropriate compliance policies and procedures in place for such things as ASX listing rules, trade practices, occupational health and safety, employment recruitment and dismissal, intellectual property, contracts and any specific issues that are pertinent to the operations of the business?