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Forum Beginners To IPO or not to IPO?

To IPO or not to IPO?

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sbroccoli
11 Oct 2012 19:56 Link
That is the question.

But what is the answer? (oh, that was also a question...)

My first corporations have matured and I wonder if it would make sense to IPO, but I don't really find the documentation of much help here.

It explains how shares are put for sale, but little more.

Exactly what happens to the capital? Does an IPO change the way the corporation is run? Is it the same chance/risk of being bought? Does it mean it cannot be nationalised? And at what value should on IPO? Asap or later?
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Crafty
11 Oct 2012 21:25 Link
From what I know: (and this is for state corps)

The cash raised from sold shares goes to the owner - the country.

Running of the corp remains the same as long as you have a controlling number of shares.

If you retain 51% or over of the shares then no one could nick the corp unless they buy it outright.

You cant nationalise public corps, (ones you have IPOed).

My view is it is pointless IPOing nowadays as you have very little say in who buys the shares. It used to be very advantageous when you could could state corps to CEO corps. To do this nowadays involves a lot of manipulating of P/E and MV so no IFs buy the shares.

What you are doing basically is selling a part of the monthly profit for a one off lump sum. So it's how you want to be. I think I would IPO while you can but only sell a very small amount of shares, like less than 5%. You dont know when the corp might be IPO-able again. And that way you still have complete control and 95%+ of profit coming to you.

Last thing, if you can sell shares down to less than 25% ownership then you get a truly public which does change things, but that means no one else must own greater than 25%, excepting IFs.

Remember, IFs can NEVER control a corp, even if they own 100% of the shares.

There's my take on it sbroccoli, you may be well advised to listen to others comments too.
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Drew
11 Oct 2012 21:41 Link
Crafty is on the money on this one. Selling monthly profit is all it is down to 25% but after you do that you will own so little of the corp what would be the point?

So there is a couple ways to run this. You can sell the shares make some cash and then lower the dependency on profit transfers. Ownership level only matters in respect to other owners and profit transfers. If you can make the corp successful in ways that don't result in paying shareholders anything then it is beneficial. In other words go ahead and sell off your corp if you are gonna run high taxes or high salaries. Otherwise you are selling your future
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Crafty
11 Oct 2012 22:11 Link
<!-Quote-!>Quote:

Otherwise you are selling your future <!-/Quote-!>


Who said SC isn't realistic?
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Drew
12 Oct 2012 05:42 Link
Ha I love that that quote!
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sbroccoli
12 Oct 2012 20:49 Link
Does anyone actually bother buying your State corporations? And if so, how does that Work?
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Drew
13 Oct 2012 10:24 Link
Um yes!!! It is very annoying. They tend to jeep higher PE ratios cus there is no CRU but it works the get paid as a proportion of your profit transfer amount of your corp
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Mizore
13 Oct 2012 11:26 Link
Consider tax at 75% means 75% of the corporation profit goes to your country anyway. So if tax is 75% and you own 25% of the company (fully public: which allows for an extra 50 of each upgrade), you're still getting 81.25% of the revenue.

Which in other words would mean that if 81.25% of the revenue as a fully public corporation is greater than 100% of the revenue as a state corporation, then a strategy of fully public corporations at 75% tax is better than a strategy of state corporations at any tax.

Of course, this assumes that you are willing to set taxes to 75% and are setting the goal of going fully public rather than just selling a few shares.

Keep in mind, I'm only talking about state to public corps... near as I can tell, there is little reason to IPO private corps.