Each of the following is an advantage of an exit via IPO except: a. an increase...

Each of the following is an advantage of an exit via IPO except:

a. an increase in the venture's public awareness

b. a relatively rapid path toward founder exit

c. a large financial windfall for founders and investors

d. a large influx of cash for company growth

Solutions

Expert Solution

Answer: (b)

A advantage of choosing an IPO as an exit option is that IPOs, if successful, create large amounts of capital in a short period as buyers will increase the share value.

Another big bonus of choosing an IPO for a startup is that you create an easy way for your existing investors to receive financial returns on their investment. Your investors will also be able to sell their share of the startup to the public much more easily now that the shares are free floating on the market.

Once a company becomes listed on the stock exchange, there is more buzz and hype surrounding the company’s initial offering. Increased publicity will help the company improve their customer base, as well as increase their brand awareness.

However if there is an information that founder is exiting from the company, it may ultimately harm the company by decreasing your share price and market capitalisation due to panic.

jeff jeffy answered 1 year ago

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