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Investment
Healthcare
Financials
25%
10%
Basic 6% materials
Utilities 1% 14%
8% 3% Telecoms
7% Consumer goods
Industrials
Consumer services 11% 14%
Technology
Oil and gas
established for your stock. A public market makes it easier for you to dispose of a portion of your interest should you want to diversify your investment portfolio or if you are ready to leave the company.
l Improved credibility with business partners. The simple fact that you are “public” provides business partners such as suppliers, distributors, and customers with more information and makes a strong statement that your company is a business of substance. Prospective suppliers and customers thus feel more secure about enter- ing into a relationship with your company.
Better employee morale and product ivity. Stock options and other incentive compensation plans enable personnel to participate in the company’s success, without increasing cash compensation. The chance to acquire stock in the company they work for also causes employees to take a longer-term view of the company.
The Disadvantages
There are also some very challenging issues associated with going public, that some view as significant disadvantages that should be
weighed against the many advantages: l Disclosure of information. As a publicly held corporation, your company’s operations and financial situation are open to public scrutiny. Information concerning the company, officers, directors, and certain shareholder information is suddenly available to competitors, customers, employees, and others. Information such as your company’s sales, profits, and the salaries and perquisites of your officers and directors must be disclosed not only initially, when you go public, but also on a continuing basis thereafter. l Management demands. Top management must be available to shareholders, brokers, securities analysts, and the press - all of whom want up-to-date information about company progress. Executives must also be involved in preparing written information about financial results and other company matters that must be reported to the public and the regulatory authorities. l Pressure to maintain growth pattern. Management will have to begin reporting operating results on a quarterly basis. That means that parties will now evaluate your
Source: London Stock Exchange, AIM Market July 2017
company quarterly, which will intensify the pressure and shorten your planning and operating horizons significantly. l Less control. The sale of shares to the public will dilute your ownership and reduce your level of control of the company. In addition, you will be required to have a Board of Directors consisting of a majority of independent directors. The Board of Directors is responsible for protecting the shareholders’ interests and you will be accountable to them.
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