There are many drawbacks such as up-front costs, liability augmentation, extensive decision-making processes, reporting costs increase exponentially, etc. These are just a few; based on the company's performance, many other drawbacks might arise.
IPO is a fantastic way to raise the company's capital and even have an additional source of income via trading. It helps traders and investors reap some of the many benefits of the company and have long-term benefits based on the company's performance. However, looking at the downsides of having an IPO, there are plenty. While many might refrain from this, it's the dark reality that one has to accept. Therefore, the drawbacks of filing for an IPO is given as follows.
Any publicly-traded company has to provide quarterly and yearly statements about profits, losses, and operational costs. Moreover, reporting all of this and having the company audited on a regular interval basis does require exponential capital based on the company's market cap. Moreover, it's quite a laborious step where a great deed of time, investments, and operations must be invested in getting the reports right.
If you're under the notion that you would have to file a paper and then your company is publicly traded, you're under a false commotion. There are so many up-front costs in filing for an IPO. These include account fees, auditing fees, commission cheques, advertising costs, printing charges, and so much more. In addition, several smaller charges are imposed, which then add up to be greater in the long term. Moreover, you have to upgrade your in-house management and accounting department to manage this. If not, get ready to pay a third-party company that might charge a bomb for these services.
For every decision you need to take, you need your shareholder's permission as they have equally invested in the company. It's quite a difficult task as the decisions that would take hardly hours to finalize would take days, if not weeks, to pull through because you have to consider every shareholder's opinion to keep them happy.
If you file for an IPO, then there are certain things like profits, loss, operation costs, revenue generated, and so on that have to be reported. If you underreport or over-report, then there are higher chances that you would be scrutinized by the shareholders, which might cause a devaluation of your company.
It's quite a lucrative process of going public, but then the drawbacks as given above would topple the company from striding in the right direction. Once an IPO is issued and the company starts trading publicly, the decision-making process, operation costs, and even the steady giving back of profits are a few of the risks the company would have to comply with if they were to file for an IPO.
IPO prospectus is the document which gives information to the investors about the company statistics before they issue shares in public. It is mainly a 3 step process. For detailed description, read through the blog below.
An IPO or Initial Public Offering is where for the first time an earlier unlisted company sells new or existing securities and offers them to the public in the primary market.
There are many ways to check the IPO allotment status but Zerodha doesn't provide this facility on their website.** To check the allotment status you can visit the website of the registrar of the IPO**, for example, Link Intime, Karvy. With the help of a PAN number, you can easily check the status.
IPO or Initial Public Offering is the process through which a private company goes public by offering its shares to the public for the first time.
In an Initial Public Offering (IPO) a company sells its shares to investors in order to raise money. As a retail investor, you can apply for an IPO from the primary market in order to get the shares offered by the company. Once the shares get listed on the secondary market, you can sell your shares provided you have received an allotment in the primary issue.
Yes, you can apply for an IPO application under a minor or HUF's name, provided they have different PAN card numbers. Minors can open a Demat account with their parent’s PAN Card and bank account.
IPO is the primary stage where the company goes public and starts gaining investments from people. It is essential for the company to manage the details properly. For Public, IPO should remain open for at least 6 days and for maximum 10 days.
IPOs can be a good option for beginners as they provide an opportunity to get the shares of good companies at an attractive price. Though IPOs can provide good listing gains and quick profits, good companies can help you to create massive wealth in the long term.
No, the application process for an IPO can be availed with zero brokerage fees. Applying in an IPO is free of cost and you don't have to bear a fee.
Yes, it is mandatory to have a PAN number to apply for an IPO since July 2006 as per Securities and exchange board of India (SEBI).