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As you requested, this memorandum describes the advantages and disadvantages of taking your company, Talon, Inc., public.A primary advantage of going public is that Talon will have access to a much larger pool of equity capital.The company's stock will trade on an organized market.Therefore, the company can more easily issue additional stock.Because the stock of the company is publicly traded, it can be used for business acquisitions, and the company can offer stock-based compensation to Talon's employees.Finally, the owners of Talon are afforded the opportunity to readily sell all, or a portion, of their investment in the company.Therefore, the owners' investments become liquid.
The primary disadvantage of going public is the cost.There are significant costs involved in the initial public offering of stock, and the continuing costs of compliance with SEC laws and regulations, including the Sarbanes-Oxley Act.Being a public company necessarily causes management to focus on maximizing stock price, which may not be in the best long-term interest of Talon.Finally, public companies must disclose significant amounts of information that becomes available to competitors, customers, and potential corporate raiders.
Because of these significant costs and benefits, it is important that the board of directors of Talon carefully evaluate the decision about whether or not to go public.If you need any additional information, please contact me.
Keywords: public, equity, capital, stock, trade, compensation, investment, cost, offering, price