Advantages And Disadvantages of Stock Market Listing

 Fundraising

For a company, listing on the Stock Exchange has several advantages stock technical analysis in Australia its notoriety is greatly increased among its customers and suppliers, and this notoriety is able to increase future success. If it is well managed, the financial communication imposed on any listed company can also give rise to publicity, the repercussions of which will also be commercial.

The main advantage of listing a company is also the possibility that is always open to appeal to the markets for financing (issue of new shares and/or capital increase, issue of bonds, etc.) and to make external growth operations (for example within the framework of Public Exchange Offers). The CAC 40 companies still raise several billion euros on Euronext each year.

Majority Shareholders and Minority Shareholders

For the majority shareholders of a company, the liquidity obtained by an IPO certainly makes it possible to easily sell part of their shares without losing the power of control that is theirs, or even to "take out on the stock market" such and such minority shareholder, but the independence of their previous management will never be the same.

Regularly published on a mandatory basis, financial parameters (activity growth rate, earnings per share, dividend per share, etc.) will now influence the strategy implemented since the value of the company (and of its securities made public) will now be judged on these criteria.

Finally, an IPO and the regular financial communication that follows necessarily go through a specialized financial institution and are very expensive. If the Microsoft company was able to raise funds which it would never have been able to benefit from without its IPO in 1986, the Swedish company Ikea has always preferred to stay away from all stock markets, while leading for 40 years an international investment policy.

A Matter of Size

When the free float market capitalization (all the capital actually in circulation) of a company is less than 500 million euros (which will imply a listing on Euronext on compartments B or C), large institutional investors will not be interested easily in the securities of this company and the volatility of these securities will be very important.

The disadvantage here is significant: it will take only a few buyers or a few sellers to drive up or down the company's stock prices in marked proportions.

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