It is a question you have probably heard posed many times. Why take a company public and have it listed on the Stock Exchange?

Taking your company through a public offering on the securities market is a major undertaking for any entrepreneur. The event is at once a source of pride, an opportunity for business growth, and a serious legal responsibility. It should involve consultations with members of the investment banking, legal, and accounting professions for authoritative counsel on the process. There are certain benefits to be gained from taking your company public. However, you must also be willing to assume additional responsibilities. By sharing ownership, you increase your company's business opportunities, but give up exclusive control of its future. The Jamaica Money Market Brokers'successful public offer in December 2002 for 17.6 percent of the company's shares and Capital and Credit Merchant Bank's offer of 33 percent of its stock to the public earlier this year generated much interest and several queries about the listing process and its related benefits.

For all practical purposes, going public in the local environment could be equated with listing on the stock market. Technically, however, going public involves changing a company's status from being privately held by 20 or fewer owners to being publicly held by more than 20 stockholders, or the process of selling shares to the general public. On the other hand, becoming a listed company is the process of being approved by the Jamaica Stock Exchange to have the shares of the company listed and traded on the Exchange. There are benefits to going public and having your company listed. The move can serve to: Expand access to capital: A successful initial public offering (IPO) can immediately bring considerable proceeds to a company, making the public market potentially the single most substantial source of corporate funding. Subsequently, public companies may return to the market for additional capital through secondary equity offerings.

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Increase employee commitment and recruiting power: By instituting a stock purchase plan for employees, public companies can, in effect, make employees part of the ownership of the company. Such plans tend to elicit a stronger employee commitment to productivity and quality, since they link employees'financial future to the company's success. At the same time, these plans express the company's goodwill through its offer to share ownership.
Complement product marketing: Articles appearing in newspapers or magazines about a public company, whether these result from its own news releases, media relations initiatives or enquiries from business journalists, serve as useful product marketing/ communications support and corporate exposure for the company.

At the same time, national newspapers and magazines are much more likely to cover public companies than private companies and focus on products from a positioning and market-share perspective. Even the daily stock market tables contribute to the general awareness of public companies. Likewise, a company's annual report, quarterly reports, and corporate identity brochures publicize the company's products as much as they define the company, outline strategy, and report on performance.
Expand business relationships: The publicity that a public company generates by meeting its disclosure obligations may bring it to the attention of prospective suppliers and distributors, potential partner companies for joint ventures, or even a research laboratory or inventor with a marketable idea. Such relationships, existing or future, are strengthened by the added confidence that comes from knowing that the company has met stringent reporting requirements, plus stock market, financial, and corporate governance standards. The assurance that a company's financial condition is subject to continued scrutiny by the market may even have a favourable effect on various business negotiations.
Facilitate mergers and acquisitions activity: Because public companies may be able to raise additional cash through a secondary offering, they are generally better positioned to finance cash acquisitions. Alternatively, public companies may also be able to finance acquisitions with their own stock. For acquisitions financed by an exchange of stock, public companies can offer a valuation determined by the market, avoiding the complications of calculating the value of a private company. Finally, in a merger, public companies offer the certainty of public disclosure and broad-based shareholder scrutiny when considering financial conditions and operations.
Provide flexibility in personal financial planning: Stock in a public company is generally more liquid -or easier to buy and sell - than that of a private enterprise. This benefits shareholders by providing a degree of flexibility in personal financial planning. Additionally, equity investment presently provides a tax-free income stream with the Government having removed taxation on dividends. Owning public shares helps to diversify an individual's portfolio and broadens the eventual disposition of an estate. Shareholders also benefit from the fact that calculating the proceeds from the sale of public shares may be easier, given their public market valuation. So why you may ask, given these clear benefits, are more companies not listed on the Exchange?

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