Question

In whose shares of this type of company are purchased. (d) explain any two advantages and limitations of such companies.
1

Answer 1

Answer:

An initial public offering (IPO) is the first sale of stock by a company. Small companies looking to further the growth of their company often use an IPO as a way to generate the capital needed to expand.

Although further expansion is a benefit to the company, there are both advantages and disadvantages that arise when a company goes public.

Advantages vs. Disadvantages of Going Public

As said earlier, the financial benefit in the form of raising capital is the most distinct advantage. Capital can be used to fund research and development (R&D), fund capital expenditure, or even used to pay off existing debt.Another advantage is an increased public awareness of the company because IPOs often generate publicity by making their products known to a new group of potential customers. Subsequently, this may lead to an increase in market share for the company. An IPO also may be used by founding individuals as an exit strategy. Many venture capitalists have used IPOs to cash in on successful companies that they helped start-up.

Explanation: