Until recently, the ultimate goal for an entrepreneur was to get his or her company listed on a reputed stock exchange such as the NYSE or Nasdaq, because of the obvious benefits, which include:
- An exchange listing means ready liquidity for shares held by the company’s shareholders.
- It enables the company to raise additional funds by issuing more shares.
- Having publicly tradable shares makes it easier to set up stock options plans that can attract talented employees.
- Listed companies have greater visibility in the marketplace; analyst coverage and demand from institutional investors can drive up the share price.
- Listed shares can be used as currency by the company to make acquisitions in which part or all of the consideration is paid in stock.
These benefits mean that most large companies are public rather than private. Very large private companies such as food and agriculture giant Cargill, industrial conglomerate Koch Industries, and DIY furniture retailer Ikea are among the world’s most valuable private companies, and they are the exception rather than the norm.