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Corporate Finance and The Quality of Money

Economics as a broad discipline is sometimes treated as a hard and quantitative physical science and sometimes as a human and social qualitative science.

The ongoing debate revolves around whether economics follows certain mathematical laws which can be discovered, or whether it revolves more around generalities and tendencies which can be explored but never proved for certain.

 

Corporate finance, as a subset of economics, tends to be framed very much as a hard, mathematical science.

Whereas accountancy is a mathematical record of what has already occurred in relation to the trade and ownership of a company, corporate finance is the process of matching necessary funding to trade and the allocation of ownership through investment.

 

Stock and credit need to be funded, through various combinations of equity, debt and trade funding instruments. Companies' ownership can change over time through the allocation of equity and investment aimed purely at ownership acquisition, or specifically for the funding of certain activities.

 

However, fresh thought is required about what value can be brought beyond the immediate cash value. This is particularly true in relation with regard to investments into growth companies, especially earlier stage ones. The new research theory of the quality of money is bringing attention to bear on how investment is considerably more than the exact monetary value alone.

 

The concept of the quality of money includes evaluative capacity, co-creation of a working relationship and a realistic plan, ongoing management support, ongoing sector leverage and additional networks, and the ability to construct an appropriate follow-on funding plan.

 

Some of the existing problem lies in the traditionally adversarial relationship between investor and investee. This has been exacerbated by the spate of TV business investment competitions and their host of regional and local imitators.

 

Good investment agreements are not built around brief and aggressive encounters, where the entrepreneur tends to rely on hyperbole and the potential investor often strays into overt bullying.

 

Another key ground on which investment discussions could frequently be much more productively established is that of a realistic plan going forwards. Entrepreneurs often feel a need to talk up potential - often to quite infeasible levels - and investors will quite often understate their perceived potential in order to contain owners' valuation expectations.

 

Neither of these tactics will enhance the ultimate objective on which investor and investee interests are in fact completely aligned: the creation of fresh value in a business.

 

Far too few institutional investors have created rich evaluative methodologies. All too often a former banker will have a moderately good general understanding of general marketplaces. Really effective funders like the experts at CL King & Associates have built around themselves not only exceptional personal knowledge but also extensive networks of experts. These are quite frequently a combination of specialist academics who can comment on IP potential and two types of business-people: sector experts who can comment on the precise proposition and senior and successful entrepreneurs who assess and support management, marketing and motivation.

 

This leads on the final element in this overview of the quality of money - the ability to plan for funding success. If an investor does not have particularly deep pockets itself, this is particularly important.

 

If a business does achieve encouraging growth with its first serious injection of capital, the last thing it needs to be faced with when this tranche begins to run low is the distraction of seeking to find a whole new set of investment relationships and to begin again from scratch the huge task of promoting itself and securing investment.

 

Whilst it is very tempting for young businesses to take whatever investment they can find, it is wiser again to attempt to secure also the best quality of money. Also, for investors, it is imperative that they consider if they are risking selling their investment short through excessive aggression, lack of commitment to networks and support, and an inattention to possible future scenarios.

If you want to learn more, please visit here: http://www.clking.com/

Financial Importance Behind a Short Term Investment Plan

Investments can be both short termed or long termed covering the interest and financial planning done by the investors. This is because behind the management of money, investments play a major role which every investor cares to understand and plan accordingly. To begin with an individual interested in investing should decide upon the percentage of his income he care to put on a short term investment plan. Based on the savings and financial conditions these plans related to investment should always be made touching all the factors of risks and loses. To avail the benefits found in the present market condition, many individuals go for investing for a shorter period of time. This is because fast changing rate of interest on commodities like silver, gold and other stocks attract the investors to put some amount based on the same after certain worth countable planning that can incur a profit subsequently.

 

It is found always necessary to set some financial goal for a better and secured future. Such plans based on the economical and financial conditions of an individual can be either purchase of a house, a retirement policy or any similar aims that involves discipline investment planning before achieving it. People go for long time investment plans to meet their goals related to economy and finance. But if he fails to appear in any optimized solution before investing on such plans, he should approach or hire a financial planner with no trace of hesitation. This is because these financial planners can provide best services catering all the demands and expectations of any client or customers that seek his profitable advises.

 

A financial planner has the potential to look and estimate about all the unseen risk factors and can perfectly estimate if any losses can erupt abruptly behind any short term investment policy. He is a skilled person to elaborate every nook and corner of an investment plan showing both the positive and negative aspects of the same. Moreover, in long term investment policies, the factors concerned with the tax benefits, money management, etc can be best monitored by these financial experts. So at any point of time slot an investor should consider these factors and consult a financial if unless he fails to focus on all the possibilities and outcomes behind an investment.

 

If you still have queries about how to proceed with your investment goals then call at 518.447.8050 and talk to the experts at CL King and Associates.

Read also: CL King Corporate Finance Strategies for Small Businesses

How Safe Are Corporate Bonds?

Many companies use two ways to raise the money required for business growth. The way in which they do this is through issuing shares or issuing bonds. With shares you become a part owner of the company but with bonds you become a lender to the company. Corporate bonds are one of the main ways for them to raise capital. The question arises: just how safe are corporate bonds?

 

As with all bonds, corporate bond prices are sensitive to universal fluctuations in interest rates. Standard & Poor's, Moody's or Fitch rate most bonds. Any with a rating of BBB or higher are considered to be investment grade. Those rated lower would be considered as a "junk bond." The higher the rating the lower the rate of return the issuer can offer. While an investment-grade corporate bond may still default you can be more confident in its ability to repay its debt.

 

Ratings can be used to help you make better investment decisions and they allow investors to compare the financial strength of each company. A poor credit rating indicates a higher risk that the company will default and you will not get your money back as promised. The benefits of credit ratings are that they are widely available and offer a simple measure of risk. A low credit rating does not necessarily mean you should ignore the company but it does indicate that caution is warranted.

 

Investment-grade corporate bonds are suitable for investors seeking income and for conservative investors who want a higher yield than would be available with government or treasury bonds. They also add diversification for the more aggressive investor. These bonds are considered very safe investments, and they pay slightly higher yields than government bonds

 

At the end of the day corporate bonds are only as safe as the company in which you invest. Read annual reports to learn about the company's cash reserves, their outstanding debt and profit projections. Look for realistic responses to economic changes. Do they adjust in times of economic downturn?

 

As with any investment corporate bonds vary in the degree of safety that they offer the investor, and nothing is guaranteed. The corporation issuing the bond guarantees the bond, but the safety of the investment depends largely on the credit worthiness of the company. Municipal and government bonds will have a higher rating than a corporate bond and they offer lower income opportunities as a result of the lower risk. Corporate bonds are safer than shares as they have preference over share holders in the event that the company fails.

 

When considering investing you should think of your own personal circumstances, your desire for risk, your personal strategies for investing, and the current market conditions. The final decision will be yours and you can only use the tools available to assess the safety of corporate bonds.

 

If you have any query regarding this then consult with the experts at CL King and Associates. CL King has acted as Co-Manager for bond offering for many reputed companies such as Walmart, Charter Communications, Southern California Edison and many more. 
If you want to learn more, please visit here: http://www.clking.com/about/

Fixing Some Common Stock Market Investing Mistakes

Investing can be incredibly dangerous if you get right down and think about it. If you make just a few bad choices why, you can wipe out an entire lifetimes worth of careful savings and planning and endanger your entire retirement... heck you can even get yourself thrown out on the street.

 

Of course, this is only an extreme possibility, but it is a possibility nonetheless; which makes investing in the stock market an apprehensive undertaking for many individual investors, but it doesn't have to be if you just follow these few simple steps suggested by our experts at CL King to help you avoid some of the most common stock market investing mistakes.

 

The first mistake that most people make is to fail to diversify. If you just purchased a few stocks and spent all of your savings on those few stocks than the chances increase exponentially that you may lose your money. All it takes is one or two of those stocks to decrease in value and you can quickly lose tens of thousands of dollars or more.

 

If on the other hand, you had simply diversified into many different stocks then the fact that one or two stocks decreased would not be a life-threatening or retirement threatening situation. Diversifying allows you to watch dispassionately and notice the stocks that aren't performing well, at which time you simply sell them and reinvest them into others that are performing well.

 

Not only is it a safety net in the fact that just mentioned above, it also has mathematical properties that are beneficial as well. All stocks have an inherent market risk which means that if something happens to the market as a whole it will correlate and affect an individual stock as well. By purchasing many different stocks you spread that market risk out and in effect decrease the market risk, sometimes down to zero depending on how many different stocks you own and how correlated each of them are to the broad market.

 

Another mistake that many people make is poor record-keeping. How can you know which of your stocks are performing well and which of your stocks are tanking if you don't keep good records? These days stock brokerage firms do a pretty good job of sending you reports, the problem is they don't send those reports until after the month is over at the earliest, and sometimes they only send them out quarterly which is not soon enough for you to determine a poorly performing stock and sell it.

 

Many individual investors look for gurus; people they think of as experts in the field of stock market investing and then they tend to follow the advice of those gurus. This often ends up poorly because those gurus often have their own agenda that has little to do with offering you good advice. Stocks should be purchased based on sound financial analysis not on a hot tip from somebody you think of as an expert.
So there you have several mistakes that individual investors make that you can now be on the lookout for so that they don't destroy your stock portfolio.

 

CL King and Associates provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. CL King has acted as Co-Manager in the follow-on common stock offering by Trupanion, Inc. The offering of 2.1 million shares of its common stock raised $69 million. The offering was priced at $33 per share. The stock is listed on NASDAQ under the ticker TRUP.

What You Ought to Know about Investment Banking?

Investment banking is a field of banking which specializes and aids companies to acquire funds. In fact, it is more than helping companies acquire funds, but also giving them advice for numerous transactions which companies might be involved in.

 

Initially, the banks used to engage in commercial banking. This is whereby an institution collects deposits from clients, and then proceeds to give them direct loans. But nowadays, this has been mostly replaced by investment banking where an institution may generate funds in two different ways. The first is by the institutions drawing funds through the capital markets, usually by selling stock in their company, and the second one is by seeking venture capital or private equity. This is done in exchange for a stake in the company.

 

It is worth noting that these types of banking firms gives investment bankers advice and consultancy services, which include advice on mergers, acquisitions, and so forth. They may also track the market so as to advice their clients on how best to manage their public assets, or even when to make public offerings. However, the line between investment banking and other forms of banking is quite thin, due to deregulation which allows banking institutions to come up with more and more sectors. As such, some of the services that were exclusively offered by investment banking firms can now be offered by mega banks.

 

In the world of money market, experts in investments are being sought after for their expertise. Such experts are involved in constant traveling and working for long busy hours. But in essence, it is a lucrative career which ensures that investment banking experts get handsome financial incentives a matter of fact, owing to the past financial crisis in most parts of the world, investment banking experts are being sought after than ever before.

 

If you still have queries about how to proceed with your investment goals then contact at 518.447.8050 and talk to experts at CL King and Associates.
To find more details, please visit here: http://www.clking.com/equities/research/

Investment Banking - Types to Know About

Investment banks like CL King help private as well as public companies and organizations to gathers funds in both debt and equity capital markets. These banks were originally founded in order to raise capital and provide guidance on corporate financial strategies, such as acquisitions and mergers. Investment banks assume many different roles such as handing safety issues, providing institutional and public investors with brokerage services, providing corporate clients with financial advice, offering guidance on acquisition deals and mergers and more. These days, you can also find banks to have ventured into bridge financing, foreign currency exchange and private banking. Know about the two main types of investment banking companies.

 

Basic bank for invest

This kind of bank tends to issue bonds and stocks to customers for a predetermined sum. Then the bank invests this sum which has been used by the client for buying bonds and stocks. Such types of investments vary across different banks. In the nations where this type of investment is permitted, investment banks come with networks of lending and financial organizations that they can derive profit from. Other banks also make investments in construction and property development. Customers with bonds and stocks would tend get payments from the amount of profit that is made on the sum that they have invested for a particular time period.

 

Both the investment bank and the client derive profits from the sum initially invested by the client. As these types of banks are completely familiar with the trade methods, they are often consulted about corporate investment activities like acquisitions and mergers by both big and small corporations and business houses.

 

Merchant bank for investing

This is the other kind of investment bank. Such kinds of banks participate in trade financing and provide business ventures with capita in the form of shares and not loans. These banks have their businesses based on how secure shares are. Such types of institutions only fund those business ventures which have only started in the world of business. Generally, startup merchant companies do not get any financing. Merchant banks can be regarded only as investment banks which are ready to invest some amount of the capital of the organization. The money is put in the form of an equity investment. The company acts like research and advisory firms into the transaction and offers advice. In case you want trade financing, you will like to get in touch with a merchant bank rather than an investment bank.

 

The primary function of these banks consists of offering financial services and advice to individuals as well as corporate houses. Such kinds of banks function like a type of intermediary between the consumers of the securities and the issuers of the capital. Various companies issue these kinds of securities in order to gather funds in the stock markets. Merchant banks offer better monetary solutions and options to the customers, and can assist customers to gather money via low-cost resources. These banks are able to revive the economic health of sick firms.

 

CL King & Associates is a full-service investment bank and provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. The focus is on debt and equity capital markets remain the core of our robust platform supported by a well-respected research, sales, trading and clearing operation.

If you're still doubtful about how to proceed with your investment goals then contact us at 518.447.8050

Global Investment Banking - CL King

A global investment bank's business thrives on doing deals. Global investment banking entails raising capital such as debt or equity for their clients as well as advising on a customer's possible merger and acquisition transactions. On top of that, global investment banks also market securities such as stocks, bonds, and treasury bills to their institutional investors. These international investment banks actually trade for their respective accounts. There are numerous existing investment banks that are also involved in the management of third-party assets. International investment banking involves various departments such as the departments of debt capital market, equity capital market, asset management, risk management, trading, treasury management, merger and acquisition, as well as research.

 

The global investment banking world could be really confusing to an ordinary individual and that is a reason for people to seek help from qualified investment banks such CL King and Associates. A truly fine provider of the different global financial services should have a solid foundation in terms of dealing with the international market. It should also be able to timely deliver the global financial services and solutions that their clients might require from them. A few traits that a good international financial services provider have is that it should be able to offer sales, trading, advisory, and most importantly, the various strategies to raise a company's capital.

 

A first-rate global investment bank should also be supported by competent staffs that boasts of a high level of execution capabilities together with an extensive and impressive track record. They should be able to properly distinguish the exact needs of their every client, set up customized financial proposals, and provide tailor-made financial strategies. Topnotch international financial services provider also maintains good corporate governance. These corporations try to fulfill all their social responsibilities to their shareholders as well as the other stakeholder groups. They enhance their corporate values and instill these in their employees while offering market-focused financial solutions and advice to their clients.

 

Some global financial markets that top investments banks cater to are those of New York, Tokyo, and London, among others. Global investment banking actually works to provide quality service to a vast clientele all throughout the world. Clients of international investment banks include the government sectors, major corporations, hedge funds, financial institutions, and also to other organizations. Global investment banks offer their services all around the world such as North America, South America, Africa, Europe, Asia, as well as the Middle East.

 

Global investment banking is very important to numerous clients worldwide. It has a lot going for them and it also offers flexibility for their clients. The primary objective of international investment banks is to ensure the financial success of their clientele. This is the reason as to why these banks offer plenty of solutions, strategies and services that involve the raising of capital from the public and private sectors, financial restructurings, and also financial solutions or even financial advisory. By providing these services, it guarantees that these international investment banking units offer extensive financial market knowledge as well as coordinated execution to their clients all over the world.

 

CL King & Associates is a full-service investment bank and provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. The focus is on debt and equity capital markets remain the core of our robust platform supported by a well-respected research, sales, trading and clearing operation.

 

If you're still doubtful about how to proceed with your investment goals then contact us at 518.447.8050.

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C.L. King - Growth Stock Investing

Growth stock investing is a typical way to long term investing. When we hear the phrase "stock market", we might think of shares being traded every day. But trading in stock market is different from growth stock investing. In trading, traders only take advantage of the stock's price fluctuation. Normally, a trader buys a stock at a lower price and sells at a higher one. Profit comes from the price margin or from the resulting balance between the buying and the selling price. In growth stock investing, it is not only the increasing price of stocks that makes an individual investor buy some shares. The increasing size of portfolio and its dividends are in fact the primary considerations.

 

Buying some growth stocks begins with identifying the future of a small company. Most people think that large companies are a good bet for investment. In reality, these large companies do not have any more room for growth perhaps because of operational cost. The most probable reason to buy such blue chips is the stability of investment and income. Smaller companies can be a better source of growth stocks. However, not all small companies could become growth stocks. There must be a condition to determine so. Some companies are said to be growth stocks when they are fast growing. Ideally, early buyers are the ones who will benefit the most. Thus, every investor wishes not to be late in his entry.

 

It must be sought and analyzed why some companies grow so fast. It could be that they are competitive in their respective industry or they just happen to get some opportunities that make them competitive. This competitiveness can be identified by their consistent effort to innovate. Assuming, a company introduces a new product which is unique in the market. After a short period of time, the product becomes popular and the best in the market. Not long ago, the company plans to develop another unique product in order to sustain their market dominance and repeat the same miracle. Since they have proven their credibility, investors will surely line up to buy some shares of such a company even upon the release of the news that the company is said to develop another competitive product. This aggressive innovation can make the company a candidate for becoming a growth stock.

 

Our experts at C.L. King & Associates recommend investors to start with enough capital when investing in growth stocks. There is no exact amount of what is enough for all investors. But everyone knows what is acceptable for himself. Let us suppose that we started with $50,000. We bought a stock worth $1 per share, so we owned 50,000 shares of a growth stock. After a year, our stock was worth $2 and the dividend was $10%. If the dividend were declared to be a stock dividend, our shares would become 55,000 shares. Since the market value of the stock was $2, we had a floating investment worth $110,000. In just one year, we gained more than a hundred percent. If we had put the money in a bank, we would have earned only around 10%. In that case, our money would only be $55,000. This example is not a joke. It happens all the time in the US stock market. The important thing an investor should consider is to select the right stock. Therefore, in this scenario, growth stock investing is value investing. Investors should invest in the anticipation of shares valuation. The larger the capital we invest, the higher the value the investment can have.

 

When the US economy is growing faster, more and more companies benefit. The strongest factor why many companies grow fast is a better business climate. Growth stock investing is a lot easier in such condition. It is the period of expansion not only for certain companies and industries but for the whole economy itself. To begin a growth stock investing, investors should become familiar with the right economic fundamentals that affect the business environment and the performance of stocks in general. Most economic indicators are released monthly, quarterly, and annually. Not all indicators are influential to growth stock investing. But anything that affects the economy in general can directly affect any stock. There are a few economic indicators that we should look at in growth stock investing such as The Federal Reserve rate decision, the Non-Farm Payroll (NFP), and the Growth Domestic Product (GDP), and global economic news.

 

The Federal Reserve rate cut encourages risk appetite for investment in equities or stock market. It may also imply that the inflation is not any more a threat to the health of the economy. Sometimes, even without a rate cut, any dovish statement of the Fed chairman favoring a potential rate cut can move the market sentiment. Meanwhile, a hawkish comment favoring a possible rate hike creates risk aversion or a sentiment that the economy is overheating and the inflation is threatening the general health of the economy. A rate hike is a strong warning that the growing economy has reached the limit. Therefore, it is highly risky for growth stock investing.

 

Another influential fundamental indicator is the Non-Farm Payroll. It shows whether or not new jobs are created within a certain period of time. When NFP result is higher than expected, it implies expansion. It means that jobs are added to the payroll of most companies because of the growing demand of their products and services. Additional jobs can also mean more buying power of the consumers. This is the reason why the Dow Jones and S&P500 react heavily every time the NFP data is released. When the NFP data is better than expected, it is also a better timing for growth stock investing. However, this data can make or break a stock position. If the actual result is much lower than the previous one, the value of stocks will surely decline.

 

On the other hand, the GDP is one of the most reliable data to measure the growth of the economy. Upon the release, stock prices fluctuate. If the GDP is higher than the previous, investors may take advantage of the overall health of the economy. But sometimes, the GDP is not that influential. In fact, it is a little risky for growth stock investing especially when the GDP is increasing along with the higher inflation. However, the annual GDP result is a lot helpful for a long term growth stock investing. It shows that the economy has already gone far and the fundamentals are strong. So, it is safe for any long term growth stock investing.

 

Global economic issues can somehow affect the US stock market. Most large companies in the US have widespread international exposure. In the New York Stock Exchange, most stocks, being traded every day, are multinational companies (MNC) with operations around the world. Any good or bad news abroad can move the US stock market. One good example is the Euro-zone debt crisis. There are a lot of American companies operating in Europe. So, when the price of the Euro goes down, so does the S&P500 or vice versa.

 

It is therefore ideal for growth stock investing when there is no problem around the world. But there are some investors who have different attitude toward growth stock investing. They buy stocks on dip and they sell on rally. These contrarian investors trade during the worst time because they believe that the cheapest stock price is the best start for any growth stock investing. And after quite some time, they sell when everybody is willing to buy.

 

Whatever method one wishes to follow, the key fundamentals of the US stock market are highly important for growth stock investing. Investors' decision depends on the information they get and each finds different opportunities and perceptions. This condition makes the stock market more efficient for growth stock investing.

 

If you need any help then consult with the experts at C.L. King.
C.L. King has a rich history of providing equity research, market making and liquidity creation services to clients specializing in small- and mid-capitalization value and growth stocks. Our commitment to excellence and demonstrated analytical, trading and investment banking expertise sets us apart from our competitors in the boutique capital markets space

Channeling Stocks Offer Both Great Buying and Shorting Investment Opportunities

Long and Short Backtesting Results of Stocks

Trading channeling offers one of the best opportunities to make good, consistent profits in the stock market. Good, consistent profits can be made by both buying and shorting channeling stocks. This article will explore the findings regarding backtesting channeling stocks, thus illustrating the opportunities available through buying and shorting channeling stocks.

 

What are channeling stocks?

First, channeling stocks, or sometimes called rolling stocks, are stocks that are moving up and down between their support price and their resistance price. While all stocks will at some point break out of their channel in one direction or the other, many channeling stocks will continue to move up and down between their support price and their resistance price for a period of time, thus providing the investor an opportunity to make a fairly predictable return as the stock continues to move between its support price and its resistance price.

 

Criterion for Research

As stated above, the purpose of this article is to present the findings on backtesting channeling stocks. The important criterion used to determine which stocks were included in the research is presented first. In order for the stock to be considered a channeling stock, the stock had to first establish its resistance price and its support price by touching its support price and its parallel resistance price two times each. The current price of the stock had to be within 1%, above or below, of its previously determined resistance or support price, which would be the third time it had been at this support price or resistance price, and the distance between the support price and the resistance price had to be at least 15%.

 

Secondly, 1% of the average market capitalization traded each day for the last year had to be at least $1,000. While there are many thinly-traded penny stocks that trade in a channeling pattern, it is very hard to make a profit on these stocks after taking into account the trading fees.

 

Lastly, the returns of the stocks were calculated for up to 60 days after the stock reached its support price or its resistance price. Any stock that closed more than 1% above its resistance price, in the case of shorting, or more than 1% below its support price, in the case of buying, during this 60-day period, was considered covered or sold at the closing price of that day.

 

Results

Using the criterion above, over 11,000 U.S. Stocks were tested from January 2011 to January 2012. During that period there were 2,946 different stocks that traded in a channeling pattern at one time or another, representing 6,547 occurrences, both long and short.

 

Long

For stocks that were at their support price and presented an opportunity to buy, these stocks rose to an average high price of 9.1% above their support, with a standard deviation of 23.5%. The percentage of stocks that rose above their support, thus offering an opportunity for a positive return, was 75.3%. The maximum return was 585% and the minimum return was -48.3%. Additionally, the average number of days it took the stocks to rise to their high price or to be stopped out at more than 1% below their support was 9.4 days, with a standard deviation of 15.2 days.

 

Short

On the other hand, when channeling stocks were at their resistance price, thus presenting an opportunity to short, these stocks dropped to an average low price of 7.7% below their resistance price, with a standard deviation of 11.9%. The percentage of stocks that dropped below their resistance price, thus offering an opportunity for a positive return, was 79.7%. The maximum return was 75% and the minimum return was -23.3%. Additionally, the average number of days it took the stocks to drop to their low price or to be stopped out at more than 1% above their resistance price was 9.6 days, with a standard deviation of 15.2 days.

 

CL King & Associates is an investment bank and self-clearing broker-dealer founded in 1972. CL King has worked as a Co-Manager for Bond Offering, Subordinated Notes Offering, Notes Offering and many more for the reputed firms such as Citigroup, Walmart, AT&T’s etc. We transact directly in the capital markets on behalf of corporations through our Corporate Services business focused on share repurchase and continuous share offerings.

To learn more, please visit here: http://clkingassociates.weebly.com

Initial Public Offering - Advantages and Challenges

There are many reasons why the owners of the private companies are willing to go through the vigorous IPO exercise to get their company listed in the stock exchange. While monetary gains are mostly the expectations, let us explore the other advantages and disadvantages a public listed company may have:

 

Advantages of IPO

1. Better market value: The valuation of a public listed company is generally higher than a private-owned company. This is because of the readily available company information for the general public to ascertain the value.

2. Improved company image: Given the right marketing and positioning strategy, the company's image can improve tremendously once it is public listed, in the area of branding and confidence level to many stakeholders.

3. Human assets: The company is able to attract and retain its good employees through schemes like share options and career advancements.

4. Acquisition: A public listed company can use it's publicly traded shares as payment to acquire other businesses.

5. Collateral: The shareholders may pledge their shares to financial institutions as collaterals for certain financing activities, either for the company or personal. The financial institutions are able to accept these shares as collateral because if their nature of being publicly traded.

6. Improved liquidity to the shareholders: If at any point (after the moratorium period), that the shareholders needed liquidity for their personal purposes, they can easily sell down they shares are the stock exchange.

 

Challenges

1. Transparency: Due to the mandatory reporting requirements where extensive information must be disclosed publicly, there could be business sensitive information that will be made available to customers, competitors and employees.

2. Vulnerable to takeovers: With the shares of the company being publicly traded, the shareholder's ability to control their ownership on the company is reduced, and being exposed to threats of unsolicited takeovers.

3. Pressure: There are many performance pressures associated with a public listed company, due to the fact that many information are made public within a very short span of time for the investors to ensure timely decision making. Therefore, it is normal to expect pressure on the sales and financial reporting in all public listed companies as their reporting deadlines are very periodic, i.e. Quarterly, half-yearly and annually

 

For more information consult with the experts at CL King & Associates
C.L. King has worked as a Co-Manager for Bond Offering, Subordinated Notes Offering, Notes Offering and many more for the reputed firms such as Citigroup, Walmart, AT&T’s etc. We transact directly in the capital markets on behalf of corporations through our Corporate Services business focused on share repurchase and continuous share offerings ("ATMs").

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