What to Do When Your Company Reached the Maturity Stage

The maturity stage is equally regarded as a critical stage like the start-up stage. You have done with the necessary advertisement thing like utilizing print postcards to promote your products and services and a lot more. Aside from ads through postcard printing, you also explored the use of digital media and other powerful means to attract a sizeable number of patrons. It should be the stage in which you can say that your company is stable and doing well. It is also, during this stage that the enterprise tends to outgrow its ability to finance further expansion with cash generated from its own internal operations and external sources. At this point the business will want to move into new markets, construct new plants or distribution outlets, and purchase more equipment. Sizeable sums of money for marketing may be needed to meet increased competition. Large sums of equity money are usually sought from such sources as public sale of stock or merger.

Public sale of stock is a viable alternative for raising capital when the business has a well established track record. The public equity offering sometimes has the dual purpose of raising additional funds for the company and enabling original investors to realize a financial gain by selling as portion of their shares.

The expenses involved in going public are significant. There are legal and auditing expenses as well as the cost of good placement services-the reputable investment banking firm that agrees to underwrite or sell the stock offering. Often these costs can amount to 20 percent or more of the total proceeds of the stocks sale. The company will have to devote a lot of its efforts to maintain good relations with its stockholders and the Securities and Exchange Commission (SEC). There will be strict disclosure and reporting requirements. And if the company doesn’t perform well with its equity capital, additional public financing will be out of the question.

On the other hand, sale of public stock can net the company more debt-free funds than, say, venture capital firms can supply. Going public will often produce a higher stock price than selling stock to a single buyer.

Finally, although managerial efforts may be diverted to reporting requirements and public investor relations, working with private investors, banks and venture firms also takes time.