Why does a company need to go to the stock market?



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why does a company need to go to stock market?

9 Answer(s)


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Primary reason for a company to go to stock market:
1.For increasing its capital by issue of shares.For expansion of a business which was started with a small amount of capital, adequate money is required for which a company would go to stock market.

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ok, thks Hari, but how does this process take place?
i have learned from Binny that the company can raise money from investors or by debts> could you please brief me these concept, thks

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Hi Ibrahim,
A company has 2 options to raise money: Equity or Debt.Normally an entrepreneur will have to invest his money for start of the business.To raise money subsequently, we have seen the stages of raising capital in our sessions(Angel Investors to Private Equity stage)-This is for raising equity.

For further money, the company can raise debt by way of debentures/bonds or Bank loans.

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To get listed so that as to provide liquidity to securities, mobilise savings for expansion, protect the interest of their investors by ensuring full disclosure and to raise capital.

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for getting more capital that will be used for expanding the bussiness. and maybe in some country, the company that listed in capital market has a better goodwill and more trusted than another company that not listed in capital market

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Companies would prefer IPO to debt because - you will have to pay interest in debt. This interest could otherwise be used to fund the operations.

IPO is typically preferred by companies in the tech sector. Debt is typically preferred by companies in manufacturing etc.

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in such case, all three concepts are linked? becauz to increase money(capital) you need to raise money for your business expansion and go to stock market by issuing share?

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The company needs goes to the stock market to raise money, so that they can increase the scale of their business. It is mostly done because of the difficulty of convincing a bunch of investors to invest a huge sum in the company as compared to taking little amount of money from thousands of investors.

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to raise large amount of money, company go to stock market.

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