Companies decide to go public through an Initial Public Offering (IPO) primarily to raise capital for growth, expansion, or debt reduction. By selling shares to the public, a company can access a large pool of investors, providing funds that can be used for research and development, entering new markets, acquiring other businesses, or upgrading infrastructure.

Going public also increases a company’s visibility and credibility, which can enhance its reputation with customers, suppliers, and lenders. Additionally, an IPO provides liquidity for early investors and employees holding equity, allowing them to realize returns on their investments.

It also offers a publicly traded stock that can be used as currency in mergers and acquisitions. However, going public comes with regulatory obligations, increased scrutiny, and pressure to meet shareholder expectations. Therefore, the decision is strategic, balancing the benefits of public capital with the responsibilities of being a public company.

One key reason companies go public is to provide liquidity for existing shareholders—such as founders, early investors, and employees with stock options. An IPO creates a public market for shares, allowing stakeholders to sell all or part of their holdings over time. This exit strategy rewards early risk-takers and makes the company more attractive to new talent by offering stock-based compensation with clearer value. Furthermore, publicly traded shares can be used as collateral or currency for future fundraising or acquisitions.