Question

Let's discuss the benefits/detriments of raising capital through equity (i.e., ownership in the company).

Answer 1

Equity finance is the source of finance is done by issuing the shares in primary capital market through IPO in Recognized trading stock like NASDAQ. Against the share issued investors get the ownership in the company.

There are many benefits for issuing the equity in the market, Some of them are as below,

1. This is a permanent source of finance because the amount received against the equity investment never be given back to investors.
2. There is no renewal or repayment of the equity like loan taken from bank.
3. There is no necessary to pay dividend every year so no burden for this.
4. The amount received against the equity will invested in projects and for the growth of the company
5. Investors have a vested interest in the business' success, so they get there return on investment through appreciation in equity and in form of dividends
6. Outside investors expect the business to deliver value for there investment, helping them to explore and execute growth ideas.