Advantages and Reasons for Businesses Doing IPO
Public awareness in investing has become increasingly widespread since the Covid-19 pandemic. Digitization opens up more opportunities for the public to obtain information related to investment, including investment in IPO shares.
The term Initial Public Offering (IPO) is the process when a business is able to land on the Indonesian stock exchange. By conducting an IPO, a business no longer gets a private source of funding, but can also be traded publicly.
What are the Requirements for Conducting an IPO?
Not just any company and business can reach the stage of being able to conduct an IPO. The conditions set by the exchange are also quite strict. The Indonesia Stock Exchange carries out a fairly strict curation for companies wishing to conduct an IPO.
Strict curation is intended so that the public only gets access to shares of companies that do not have problems with poor business track records. The following are the requirements that must be met by companies that will conduct an IPO.
1. Have Minimum Assets
Assets owned by a company must have reached a minimum of IDR 100 billion. This is done to show that the business that will get the IPO has reached a mature and controlled business scale and financial scale.
2. Have a Clear Organizational Structure
This requirement must be met by a business that will conduct an IPO. IDX only accepts businesses and companies with a professional and adequate management scale.
3. Achieving Profit in a Certain Time
Companies that conduct IPOs must also achieve good profit conditions. BEI really avoids companies with stagnant profit scales or even losses. In addition, investors will definitely be more interested in investing in potential businesses.
Advantages of IPO for Business People
Why would a company take the decision to do an IPO? In the process of doing business, IPOs give birth to various advantages rather than seeking private investors. For more details, here are the advantages of a business IPO for a company.
1. Get Risk Capital
By doing an IPO, the amount of fresh funds that enter your business will be even greater. With this, you can prepare a risk capital. Risk capital is a calculation of frozen funds prepared with the aim of patching up losses to the business so that the losses will not affect the personal assets of the shareholders.
2. Strengthening Business Image
The complexity of the requirements that must be met by a business to conduct an IPO makes the image of a company more credible when it is listed on the stock exchange. This image is certainly not only attractive to consumers, but also to potential investors.
3. Increase in Company Assets
Funds received by investors by conducting an IPO will directly increase the capital assets of your business. With growing assets, there will be more opportunities to expand the scale of the business you are running.
4. Merger and Acquisition Opportunities
As a company that has been registered to go public, your business will be much easier to carry out mergers and acquisitions. The process will become simpler and the valuation of the business will also form naturally from the market.
5. Controlling Company Value
If the business is still privately owned, it tends to be impossible to assess the value of your company in the eyes of the market. The advantages of a business IPO can also increase the value of the company publicly on the stock exchange. Transparency like this will also influence every decision taken by the executive ranks.
Publishing a business on the stock exchange will provide many advantages and opportunities for business development. However, you should start by analyzing cash flow well, measuring company performance, and looking at prospects far ahead.
For starters, managers can learn this through Prasmul-eli's Financial Analysis program. This can at least help company executives in deciding a step that is good for the company's financial and operational conditions.