Going Public: SME’s highs & lows

Companies go public for 2 reasons – a) raise fresh capital and b) maximize shareholders value

Small-Medium size Businesses, due to lack of knowledge in respect of financial planning & structuring  often fails to plan and invest in gaining expertise to develop this equally important aspect of their business, which is to implement balanced mix of growth & income strategies, which would give regular inflow of revenues as well as long term sustainable growth –

SME companies, in most cases, try to save money for obvious reasons, but they fall short in realizing the need to employ right expertise in gaining the much needed ability to think ahead, establish present & future needs, not just from meeting competition head-on, but also to realize the future work force within the family (owners & employees combined)

One of my objectives to gain from this writup is to gain attention of our bankers and stock brokers – please exercise caution while handling small cap companies – they are not equipped to be tested against rough trading & speculative, shortlived strategies – because for this very reason, small caps are shying away, and in the process losing out to gaining control over their capital situation – even from stock markets perspective, it is critical that we put money on small caps rather than going after, rather queing up behind handful of so-called market movers –

I also take liberty to protest politely to regulators, that they devote time & money in developing secured environment, that encourages small cap companies to come and play their part in development of capital markets, as their cumulative impact is far greater & bigger than blue chips – its time if see this as an integral part of our risk management protocol

Another known reason for small caps to go public, is to maximize shareholders value, being on this road, companies may not really need significant amount of new capital but to gain strength in terms of asset valuation based on present & future business outlook – however, there is another aspect to look at, which is to consolidate by way of mergers & acquisitions – we can either acquire non listed private companies through exchange of our listed shares to shareholders of private ownerships and broaden the capital base, similarly we have another area to look at, are opportunities of merging with other listed or non listed entities and be able to strengthen business – I feel we need to build on this subject so we create much needed awareness for small caps to look upto capital markets, not just as a platform to raise money but also to create opportunities for private small investors and other vibrant & motivated outfits

 

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