Pros and Cons of Taking Your Wyoming Corporation Public

Going public is the act of registering shares of your corporation’s stock to be sold on a public market, such as the New York Stock Exchange or the NASDAQ. Not every corporation needs to go public. The majority of corporations are privately held companies.

There are both pros and cons to taking your corporation public. The move can bring a great deal of capital to the company, as well as publicity and prestige. But the process is long, arduous and expensive.

Read more below for a brief overview of the advantages and disadvantages of going public.

The Pros

  • Capital raised that does not have to be paid back
  • Stock options as incentives for employees
  • Increased visibility and prestige
  • Definite valuation of the company
  • Marketable, liquid stock
  • Expanded diversity of investors
  • Facilitates possible acquisitions (assets can be purchased in exchange for stock)
  • Financing opportunities increase: equity, convertible debt, etc.

Raising capital is a challenge for every company. A public corporation is at a distinct advantage over a private one in this department, because a public company can attract a larger pool of investors through the sale of stock on a public market. Publicly sold stock is more liquid than privately held stock, and a publicly held company is generally seen as more financially stable.

Another clear benefit is that the capital raised from selling stock does not have to be repaid.

Public corporations tend to attract high quality talent, because they can offer range of stock options as benefits and, in general, pay higher salaries than private companies.

The Cons

  • Loss of control to public investors
  • Focus on short term financial gains at expense of long term goals
  • High upfront costs and ongoing annual fees
  • Revelation of otherwise private information to the SEC, which will then be made public (including financial statements, executive salaries, business strategies and corporate bylaws)
  • Additional cost of annual filings that must be made with different organizations
  • Additional cost and time given to accounting
  • Possibility of outside investor “takeover”

Going public is unfortunately a lengthy and expensive process, both initially and after the initial public offering (there are numerous ongoing requirements for public corporations).

The process of becoming a publicly traded corporation requires investment banks, known as underwriters, as well as accountants, lawyers, printing expenses and various registration fees. Once the company is public, there are annual registrations, annual fees, and new requirements that must be met (such as filings each year with the Securities and Exchange Commission).

A public corporation is responsible to its numerous stockholders. Generally, stockholders are concerned with a return on their investment, and thus publicly traded companies can become focused on short term gains to the detriment of the long term stability of the corporation.

Because anyone can purchase stock in a public company, it also opens up the possibility of an outside investor buying a majority share of the stock and thus “taking over” the company.


An IPO, or Initial Public Offering, is the first time a corporation sells stock to the public. An IPO can raise a considerable amount of capital for the company (the highest grossing IPOs are in the billions of dollars). Setting up an IPO, however, is both complex and expensive.


An IPO begins by finding an investment bank, called an underwriter. The underwriter (or, in most cases, multiple underwriters, called a syndicate) acts as a middleman between your corporation and the public. You will sell shares of stock to the investment bank, and they will then sell the stock on a public market.

In some countries, corporations sell their stock directly to the public, but not in America.

The underwriter is tasked with valuing the corporation and working with you to determine the initial stock price, as well as how much stock will be offered in the IPO. To do this, the underwriter will need to know how much your corporation hopes to raise through the IPO, as well as numerous details about your business and the stability of your company.

When an agreement is reached, the investment bank submits a registration statement to the SEC. The registration statement includes financial statements and information, background on both the company and its managers, outlines of how the money raised will be used, as well as any other legal considerations.

The SEC must review the registration statement to ensure the information is accurate. This period of review is known as the quiet period, which is a legally prescribed period of time during which the corporation and investment bank are restricted in what information they can reveal to potential investors.

Prospectus and Road Show

After SEC approval, the underwriter will put together a prospectus. A prospectus is a compilation of information about the corporation. The purpose of the prospectus is to generate excitement among investors.

Before establishing a price for the corporation’s stock and registering on a public market, the underwriter shops the prospectus to major institutional investors. This is known as a road show. The underwriter will use the road show as a way of determining how much interest there is in the corporation’s stock, which will influence the initial price of the shares.


At the conclusion of the road show, the underwriter will sit down with the corporation to determine the initial price of the stock. The price is based upon the valuation of the company, the success of the road show, the fundraising goals of the corporation, and the current market conditions.

The initial price is critical. If the price is considered too high by investors, the IPO may not bring in the number of investors as expected. If the price is too low, the corporation may lose out on the potential to generate higher profits.

When a price is settled upon, the final step is to register with a public exchange and set a date for the IPO.