{"id":18686,"date":"2025-06-05T09:48:05","date_gmt":"2025-06-05T09:48:05","guid":{"rendered":"https:\/\/wp-api.pocketful.in\/blog\/?post_type=ipo&#038;p=18686"},"modified":"2025-06-05T09:48:05","modified_gmt":"2025-06-05T09:48:05","slug":"why-does-a-company-go-public-launch-ipo","status":"publish","type":"ipo","link":"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/","title":{"rendered":"Why Does a Company Go Public &amp; Launch IPO?\u00a0"},"content":{"rendered":"\n<p>This question comes to the mind of every person who is interested in the stock market. When a private company offers its shares to the public for the first time to raise capital, it is called an Initial Public Offering (IPO). Its main objective is to raise funds from investors for expansion, reducing debt, and other purposes.<\/p>\n\n\n\n<p>In this blog, we will discuss the various reasons due to which the company goes public and launch an IPO in detail.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#Understanding_IPOs\" title=\"Understanding IPOs\">Understanding IPOs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#Reasons_Companies_Go_Public\" title=\"Reasons Companies Go Public\">Reasons Companies Go Public<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#Advantages_of_Going_Public\" title=\"Advantages of Going Public\">Advantages of Going Public<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#Disadvantages_and_Challenges\" title=\"Disadvantages and Challenges&nbsp;\">Disadvantages and Challenges&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#The_IPO_Process_A_Step-by-Step_Guide\" title=\"The IPO Process: A Step-by-Step Guide\">The IPO Process: A Step-by-Step Guide<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#Conclusion\" title=\"Conclusion&nbsp;\">Conclusion&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wp-api.pocketful.in\/blog\/ipo\/why-does-a-company-go-public-launch-ipo\/#FAQs\" title=\"FAQs&nbsp;\">FAQs&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"h-understanding-ipos\"><span class=\"ez-toc-section\" id=\"Understanding_IPOs\"><\/span>Understanding IPOs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When a private company offers its shares to the general public for the first time, it is called Initial Public Offering (IPO). After this process, the company gets <a href=\"https:\/\/www.pocketful.in\/blog\/list-of-stock-exchanges-in-india\/\">listed on the stock exchange<\/a> and anyone with a trading and<a href=\"https:\/\/www.pocketful.in\/blog\/demat\/what-is-a-demat-account\/\"> demat account<\/a> can buy its shares. The advantage of this is that the company can raise funds quickly and can act quickly on its business plans.<\/p>\n\n\n\n<p><strong>Becoming a Public Company :&nbsp; <\/strong>After bringing an IPO, the company is identified as a public entity. Now it has to make its financial information public every quarter and must comply with regulatory frameworks set by bodies like SEBI and stock exchanges. This gives transparency to investors and also increases the brand value of the company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-important-statistics-related-to-ipo-in-india\">Important Statistics Related to IPO in India<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Latest scenario of IPO in India : <\/strong>The IPO market in India performed tremendously in the financial year 2024-25. During this period, companies raised a total capital of \u20b93.71 lakh crore \u2014 which is 92% more than last year. In 2024 alone, the companies raised \u20b91.67 lakh crore through IPOs, which is the highest in Asia.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Global Comparison: <\/strong>India now ranks first in terms of number of IPOs. While the US and China saw 205 and 130 IPOs getting launched in 2024, India\u2019s count stood at 332.<\/li>\n<\/ul>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/what-is-ipo-allotment-process\/\">What is the IPO Allotment Process?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-reasons-companies-go-public\"><span class=\"ez-toc-section\" id=\"Reasons_Companies_Go_Public\"><\/span>Reasons Companies Go Public<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Various reasons due to which the companies go public are listed below:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Access to Capital : <\/strong>Every business needs funds to expand whether it is to open a new manufacturing plant, invest in technology or repay old debts. By bringing an IPO, companies can raise large amounts of money directly from the general public. These funds help them to act on the business plans quickly, without the tension of repaying loan or interest payments.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Increasing Brand Value and Public Profile : <\/strong>When a company is listed in the stock market, its brand identity and credibility automatically increases. Its image becomes strong among investors, media and industry due to high regulatory requirements of SEBI. This also easily helps in getting new partnerships and clients and builds trust.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Exit option for Early Investors : <\/strong>Before bringing an IPO, the shares of the company are owned by a few sophisticated investors and founders. But through IPO, they get a chance to sell their shares. This process gives them liquidity, which is not easily available in private companies.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Attracting and retaining talent : <\/strong>In today&#8217;s competitive world, retaining talent is very important. After becoming a public company, employees with vested ESOPs can easily sell their shares as per the company\u2019s ESOP (Employee Stock Ownership Plan) policies. After the IPO, the shares are traded and if the company\u2019s share performs well, the trust of the employees in the company\u2019s future increases and they are more inclined to stay with the company.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>For all these reasons, bringing an IPO is not just a significant event in a company\u2019s journey, but a strategic decision which can take the company on the path of long-term success.<\/p>\n\n\n\n<p><strong>Read Also:<\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/ipo-application-eligibility-criteria\/\"><strong> <\/strong>IPO Application Eligibility Criteria<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-advantages-of-going-public\"><span class=\"ez-toc-section\" id=\"Advantages_of_Going_Public\"><\/span>Advantages of Going Public<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When a company goes public by launching an IPO, it not only receives funds but also many strategic and long-term benefits. Let us understand these at a glance:<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">Benefit<\/th><th class=\"has-text-align-left\" data-align=\"left\">Description<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Capital Acquisition<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">The company gets significant capital from the public, which it can use for various purposes.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Market Visibility<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">Listed companies receive more attention from the media and investors, which increases brand visibility and credibility.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Share Liquidity<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">After the IPO, shares can be easily bought and sold, providing liquidity to old investors and employees.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Market-Driven Valuation<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">The stock market participants play a key role in determining the value of a company, which becomes a benchmark for future deals and investments.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Employee Incentives<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">Plans like stock options and ESOPs make it easier to attract and retain talent.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Better Borrowing Power<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">It is easier for public companies to get loans from banks on better terms as their financial information is publicly available.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Transparency<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">Strict regulatory rules improve the governance and trustworthiness of the company.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-disadvantages-and-challenges-nbsp\"><span class=\"ez-toc-section\" id=\"Disadvantages_and_Challenges\"><\/span>Disadvantages and Challenges&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are many benefits of a company going public, but there are some challenges and disadvantages associated with it as well. Let us know the major disadvantages and difficulties that a public company has to face:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Regulatory Compliance : <\/strong>A public company has to follow strict rules of SEBI and other regulatory bodies. This includes regular financial reporting, audits and providing comprehensive financial information, which can be time-consuming and expensive.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Market Pressure : <\/strong>The expectations of investors and the market increase a lot. The company\u2019s management may feel the pressure to show good results every quarter, which can sometimes affect long-term business plans.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Loss of Control : <\/strong>Depending on shareholding structure, founders may experience dilution of control and increased accountability to public shareholders. They have to consider the interests of other investors, which complicates decision making.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>High Costs : <\/strong>Advisors, investment banks and lawyers have to be paid in the IPO process. Apart from this, regular reporting and other corporate expenses also increase after becoming a public company.<\/li>\n<\/ul>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/benefits-of-investing-in-ipo\/\">Why Invest in an IPO and its Benefits?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-ipo-process-a-step-by-step-guide\"><span class=\"ez-toc-section\" id=\"The_IPO_Process_A_Step-by-Step_Guide\"><\/span>The IPO Process: A Step-by-Step Guide<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Let us know the main steps a company follows to launch an IPO:<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">Step<\/th><th class=\"has-text-align-left\" data-align=\"left\">Description<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Selection of Underwriters<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">The company first selects the investment banks or firms that will manage the IPO. These underwriters help with pricing, marketing, and other due diligence required in the IPO.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Due Diligence<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">The financial, legal and operational status of the company is thoroughly examined to ensure that investors get accurate information.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Regulatory Filings<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">The company submits a Draft Red Herring Prospectus (DRHP) to SEBI. After review and incorporating changes based on SEBI\u2019s comments, the final RHP (Red Herring Prospectus) is filed for public subscription.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Pricing the IPO<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">The initial price of the share is determined by looking at the market conditions, value of the company and demand among investors.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Marketing&nbsp;<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">Company\u2019s representatives meet investors, explain the company&#8217;s strengths and plans to increase investor interest.<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Going public and listing<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\">Once the IPO opens, the retail investors can apply for the shares. After the IPO subscription period is over, the shares are allotted to the general public and the company gets listed on the stock exchange (like NSE or BSE) and are then traded.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/what-is-an-ipo-mutual-fund-should-you-invest\/\">What Is An IPO Mutual Fund? Should You Invest?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion-nbsp\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Going public is a big decision for a company, which has many benefits and challenges. IPO helps companies raise funds and also increases its brand recognition, but with this the regulatory requirements and responsibilities towards stakeholders also increases. Therefore, it is important that the company takes this step thoughtfully.<\/p>\n\n\n\n<p>Going public is not just a way to raise money, but is part of the long journey of the company. With the right timing and planning, it helps in moving the company forward. Therefore, the decision of IPO should always be taken wisely and strategically.<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">S.NO.<\/th><th class=\"has-text-align-left\" data-align=\"left\">Check Out These Interesting Posts You Might Enjoy!<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\">1<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/anchor-investors-in-ipos\/\">Anchor Investors in IPOs \u2013 Meaning, Role &amp; Benefits<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">2<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/how-to-cancel-an-ipo-application\/\">How to Cancel an IPO Application?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">3<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/difference-between-ipo-and-fpo\/\">Why Invest in anKey Difference Between IPO and FPOIPO and its Benefits?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">4<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/what-is-ipo-cycle\/\">What is Face What is the IPO Cycle \u2013 Meaning, Processes and Different StagesValue in an IPO?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">5<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/ipo\/what-is-nii-in-ipo\/\">What is NII in IPO?<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faqs-nbsp\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3 class=\"\">Why does a company go public?<\/h3><p class=\"saswp-faq-answer-text\">A company goes public so that it can get capital for executing its future business plans.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">What is an IPO?<\/h3><p class=\"saswp-faq-answer-text\">IPO means Initial Public Offering and it marks the event when the company sells its shares to the public for the first time.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How does an IPO help a company?<\/h3><p class=\"saswp-faq-answer-text\">The company raises money in exchange for equity from launching an IPO, so that it can expand its business, reduce debts, and other purposes.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Are there any risks in going public?<\/h3><p class=\"saswp-faq-answer-text\">Yes, after going public the company has to follow strict rules related to reporting and may face pressure from market expectations.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How does going public affect control over the company?<\/h3><p class=\"saswp-faq-answer-text\">After going public, the founders and management lose some control over the company\u2019s decisions as they also have to listen to other shareholders.<\/p><\/ul><\/div>\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This question comes to the mind of every person who is interested in the stock market. When a private company offers its shares to the public for the first time to raise capital, it is called an Initial Public Offering (IPO). Its main objective is to raise funds from investors for expansion, reducing debt, and [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":18690,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[183],"class_list":["post-18686","ipo","type-ipo","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo"],"acf":{"freelancer":"Harjyot"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.13 (Yoast SEO v21.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Does a Company Go Public &amp; Launch IPO?\u00a0 - Pocketful<\/title>\n<meta name=\"description\" content=\"Why companies go public through IPOs, the advantages and challenges involved, and how the IPO process works in India. A complete guide for investors.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Does a Company Go Public &amp; Launch IPO?\u00a0\" \/>\n<meta property=\"og:description\" content=\"Why companies go public through IPOs, the advantages and challenges involved, and how the IPO process works in India. 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